SunSirs: Lack of Fundamental Benefits, China ABS Market Fell in December 2023

In December, the domestic ABS market saw a negative decline, with many spot prices of various brands decreasing. According to the Commodity Market Analysis System of SunSirs, as of December 31st, the average price of ABS sample products was 10,662.5 RMB/ton, with a decrease of -4.26% from the average price level at the beginning of the month.

In terms of supply: In the early stage, the domestic ABS industry had a high load, and due to supply pressure, some enterprises had a reduced load. At the beginning of the month, the operating rate of ABS aggregation enterprises was 75%, and the current industry load has decreased to around 71%. The production of the enterprise is relatively stable, but due to some new contract orders and some enterprises reducing their burden in the latter half of the year, the inventory situation has improved narrowly. However, the improvement of the company's loss situation is limited, and the supply pressure is still high. The supply side's drag on the spot market continues.

In terms of raw materials, the overall trend of ABS upstream three materials in December was poor, with a large fluctuation in the acrylonitrile market, and the overall price almost returned to the level at the beginning of the month. The price of raw material propylene has weakened, and the cost support for acrylonitrile has weakened; The demand for acrylonitrile support is gradually weakening; However, the production of acrylonitrile itself has increased, and in December, the fundamentals of acrylonitrile were dynamically balanced, with prices fluctuating and consolidating.

The domestic butadiene market saw a significant decline in December. In the first half of the year, there were sporadic returns of maintenance equipment, and there was an expected arrival of cargo at the port, leading to an increase in supply and creating a bearish drag on the market atmosphere. Major production enterprises significantly lowered their factory quotes. Downstream construction has not shown significant improvement, and there is a lack of positive news on the demand side. The domestic market price of butadiene has sharply declined. After the market bottoms out, it will begin to recover at the end of the month, but considering the demand side, there may be resistance to subsequent increases.

In December, the market price of styrene first fell and then rose. The market fell for three weeks and rose for a week, with the decline exceeding the increase. The main reason for the decline is the decline in international oil prices, poor cost support, a stalemate between supply and demand of styrene, slow transactions, and a continuous decline in the market. After the market bottomed out, it rebounded, but the magnitude was small and the upward trend was weak.

In terms of demand: In December, the main ABS terminals, including downstream factories in the home appliance industry, continued to have poor stocking enthusiasm, mainly focusing on digesting existing inventory. Enterprises tend to maintain production in their procurement operations, making it difficult to increase demand. Mid stream traders tend to have a wait-and-see attitude and a low willingness to purchase goods. The slow circulation of spot goods creates a drag on the market.

The overall performance of ABS upstream materials in December was poor, with weak support for the cost side of ABS. The petrochemical plant has seen a narrow decline in its high operating level, with limited improvement in supply pressure. The demand side consumption is poor, and merchants have weak confidence in the future market. The position of spot inventory may increase after the holiday, and the prospects for improving the supply-demand imbalance in the market are not good. The ABS market may still have downward momentum, and it is recommended to closely monitor the adjustment of supply side production capacity.

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