SunSirs: Supply Increase, Demand Lags, China ABS Surges and Consolidates in Mid November

In mid November, the domestic ABS market remained stable with small fluctuations, and the spot prices of various grades showed relatively narrow changes. According to the Commodity Market Analysis System of SunSirs, as of November 20th, the average price of ABS sample products was 11,500 RMB/ton, an increase or decrease of +0.11% compared to the price level at the beginning of the month.

Fundamental analysis

Supply: In mid November, the operating rate of the domestic ABS industry continued to rise, and the load level continued to increase. After the load increase in Tianjin Dagu and Jilin Petrochemical in the first ten days, the supply of Zhejiang Petrochemical has also increased recently. The industry's operating rate has increased by nearly 4% to over 73%. The overall production of goods within the range remains higher than the digestion pattern, with an average weekly output of over 120,000 tons. Although inventory accumulation has stabilized, its position remains at a high of 190,000 tons. Overall, the supply side's support for ABS spot prices continued to decline in mid November.

Cost: Recently, the three upstream materials of ABS have shown mixed trends, with overall support for ABS costs being average. The acrylonitrile market has seen a significant increase. Due to the high number of shutdowns and maintenance facilities in acrylonitrile factories in East China such as Anqing Petrochemical, Shanghai SECCO, and Jiangsu Sierbang, market prices continue to rise under tight supply. However, the downward transmission of prices is difficult, and it is expected that the short-term acrylonitrile market will have limited upward space.

In mid November, the domestic butadiene market continued to decline. There is news of equipment being put into operation in Tianjin, and the market is expected to see an increase in supply in the future. The inventory of ports in East China is also high, and overall, there are many negative factors on the supply side. On the demand side, the downstream synthetic rubber market trend is weak, and the downstream wait-and-see mentality is strong, lacking demand support. The butadiene market trend is weak this week.

Recently, the styrene market has been weak and fluctuating. The performance of crude oil in the far end of the range is average, and the direct raw material pure benzene market has seen a narrow increase in momentum, making it difficult to provide further cost support for styrene. In addition, due to the impact of inventory replenishment at various ports, the loose supply trend has provided moderate support for the spot market. Businesses are concerned about the lack of market drivers and tend to be cautious when placing orders.

Demand: In mid November, the main terminal demand for ABS continued to be weak, and the market sentiment remained strong this month. Although the "Double Eleven" shopping festival and subsidy policies have stimulated the sales of some terminal products, the overall load position of home appliances and other factories has limited recovery, and the willingness of terminal stocking is not strong. Purchasing operations are mainly based on weak rigid demand to maintain production, which can barely maintain the balance between domestic consumption and inventory. Merchants have insufficient willingness to establish warehouses, and their offers are subject to market conditions, resulting in average activity in the circulation of goods. Overall, the demand side does not provide significant assistance to the market.

The domestic ABS market remained volatile and organized in mid November. Upstream three materials showed mixed ups and downs, providing average comprehensive support for ABS cost side. The load of ABS polymerization plant continues to rise, and finished product inventory remains high and sideways. The weak demand on the demand side is difficult to change, and market trading is sluggish. The pattern of strong supply and weak demand in the market has not changed. It is expected that the ABS market will remain weak in the short term in the future.

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