SunSirs: China ABS Market May Continue to Operate at a High Level and Remain Strong

On May 5th, the General Plastics Index was 830 points, unchanged from yesterday, a decrease of 29.12% from the highest point in the cycle of 1,171 points (2021-10-14), and an increase of 27.11% from the lowest point of 653 points on April 6th, 2020. (Note: The cycle refers to 2011-12-01 present)

In April, the general plastic industry saw an overall red trend. After the Qingming Festival, the general material consumption market has gradually taken over the pattern of downstream resumption of work in March. At the same time, March and April are also the peak seasons for some plastic products such as polyethylene. Coupled with the release of pre holiday stocking demand during the May Day holiday, multiple consumer side benefits are added to the April rigid demand base. The strengthening of international crude oil at the beginning of the month in the remote upstream injected strong cost support into the general plastic industry. Except for EVA, the general material market has shown a positive trend during the month, boosted by demand and cost.

Fundamentals: In April, the domestic ABS industry took on a low-level pattern of load in the early stage, and the operating rate at the end of the month decreased from 62% at the beginning of the month to around 55%. The supply side provided strong support for ABS spot goods throughout the month. The simultaneous rise of three upstream materials has supported the price of ABS. The terminal demand remains stable while the market trading is average.

Leading factors: In the first half of the month, domestic ABS manufacturers such as PetroChina, Tianjin Dagu, and Shandong Haijiang conducted centralized maintenance, while in the second half, Shandong Haijiang and Lihua Yi also experienced varying degrees of load reduction. The synchronous reduction in production has led to a decrease in the supply of goods on site. At the same time, due to the positive transmission of the rise in international oil prices in the first half of the year, the upstream three materials have provided strong support for ABS. In April, ABS experienced a dual drive of supply and cost, resulting in an increase in its high level.

By the end of April, the demand side will have just entered the market, and the support for spot goods will be smooth. It is expected that there will be limited changes in the fundamentals in the later period, and in the short term, the ABS market may continue to operate at a high level and remain strong.

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