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SunSirs: Affected by Weak Demand and Blocked Logistics, ABS Weakly Operates (Feb.10-14)

February 19 2020 10:18:27     SunSirs (Daisy)

The ABS market weakened in the middle of February while its spot price in the national market had a price correction. As of February 14, the main offer price of general-purpose ABS was about 13300.00 RMB / ton, down 1.48% from that at the beginning of the week.

Industry Chain: As for upstream aspects of ABS, the styrene market is in a downturn this week, with prices continuing to fall and trading volume not improving much. The mainstream price of styrene in China fells this week. The price of sample enterprises on Monday (February 10) was 6900.00 RMB / ton, and the price of sample enterprises on Friday (February 14) was 6666.67 RMB/ ton, down 3.38% last day and down 19.35% compared with the same period last year. 

The operating rate of the industry continued to decline. Due to different traffic regulations, the transportation capacity of vehicles was limited, making not smooth circulation of good. The inventory of styrene enterprises increased. The port inventory of styrene is still at a high level, while the downstream terminal demand has not reached the level before the festival. And the downstream receiving capacity is limited. 

The price of crude oil was first depressed and then increased. The price of pure benzene was stable, and the price of ethylene fell, which gave limited support to the cost of styrene. As a whole, the styrene market continued to decline this week, with trading deadlocked and little change in styrene delivery. 

This week, the trading atmosphere of acrylonitrile-related products in the spot market was weak, and the price was weak. The downstream construction resumed slowly. It was reported that some acrylonitrile production enterprises had production reduction plans for this. Logistics and transportation barriers are also one of major reasons for the impact of trading, with fewer market participants and few trading news. 

This week, the national butadiene market fell sharply. Some manufacturers in the north and East China were relatively active in export. In addition, Zhejiang Petrochemical and Hengli both exported those kinds of products. The market spot supply increased significantly. 

However, few downstream latex industries returned to work. Meanwhile, some rubber manufacturers' devices lower the operation rate due to high inventory. The supply and demand unbalance were leveraged. 

At the same time, Sino Group continuously cut the price, dragging market into bearish atmosphere. The market reach 5-year lowest. What’s worse, as some export manufactures predicts a lower price, bearish view exists. Some expected that the price will be lower in the future. In summary, the national butadiene cannot stop declining in the short. And it is suggested to pay attention on downstream’s demand and supplier’s price.

Future Forecast: SunSirs analysts believe that in mid-February, the ABS market weakened. And this week’s spot prices of various types of brands gradually corrected. As for cost side, 3 different type of raw material is expected to show different trend in the short term. They give a general support for cost side. The spot supply is quite sufficient while transportation is little bit blocked. Manufacturing is under great pressure, ending up in lowering price and focusing on trading volume. In addition, downstream is poor as the delay of resumption. Market is quite flat. It is expected that ABS price might slightly increase in the short term. 

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