SunSirs: Strong Cost Side, China ABS Market Prices are Rising

Recently, the domestic ABS market has seen a narrow rise, with spot prices of various brands increasing. According to the Commodity Market Analysis System of SunSirs, as of January 22, the average price of ABS sample products was 10,812 RMB/ton, a +1.14% increase or decrease from the average price level at the beginning of the month.

In terms of supply: At the end of last year, the domestic ABS industry had a high load, and due to supply pressure, the load of enterprises decreased independently. Recently, the operating rate of ABS polymerization enterprises has been lowered to around 66%, resulting in stable production and a continued decline in inventory due to the manufacturer's destocking operations. But the profit situation of the enterprise has not improved, and the improvement of supply side pressure is limited.

In terms of raw materials, the recent trend of ABS upstream three materials is still good, among which the acrylonitrile market is relatively weak. The rise in raw material propylene prices provides reasonable cost support for acrylonitrile. But the supply of acrylonitrile is relatively loose, and the market is not buying well. But fortunately, some forward contracts and pre holiday stocking dragged the bottom, resulting in weak prices and stagnant operations.

Recently, the atmosphere of the domestic butadiene market has been high, with a significant increase last week. The main production enterprise Sinopec has raised its quotation twice by 200 RMB/ton, and a small number of bidding sources have significantly increased their prices to complete transactions. At the same time, the external prices have continued to rise, bringing a significant boost to the domestic butadiene market. The downstream synthetic rubber market trend is relatively strong, driving the market's quotation to rise broadly at one point.

Last week, the market price of styrene rose. The price of raw material pure benzene has slightly increased, and cost support is still acceptable. The increase in maintenance of styrene units has led to a contraction in market supply. The transaction in the market is still good, with a slight upward trend in the market.

In terms of demand: Last week, the main ABS terminals, including downstream factories in the home appliance industry, continued to have poor stocking enthusiasm. The main logic revolved around buying on dips and digesting inventory. As the holiday approaches, downstream enterprises have increased their holiday arrangements, and their procurement operations tend to be weak and require production to be maintained. At the same time, there has been no increase in volume for forward contracts. Midstream traders are attempting to sell at high prices, with average spot circulation and demand side support for a flat market.

Recently, the overall performance of the upstream three materials of ABS has been balanced, with increased support for the cost side of ABS. The petrochemical plant has seen a narrow decline in production, partially easing supply pressure. On the demand side, consumption is average, and merchant offers are boosted by upstream news, resulting in higher prices. The current market situation before the holiday is heavy, and trading may gradually weaken. It is expected that the ABS market may still shift towards a bearish trend.

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