SunSirs: In May, the Domestic ABS Market Fell First and then Rose

In May, the domestic ABS market fell first and then rose, and the spot prices of most brands fluctuated. According to the commodity market analysis system of SunSirs, as of May 31, the average price of ABS sample products was 10,625 RMB/ton, and the price level rose or fell by -0.93% compared with the beginning of May.

Fundamental analysis

Supply level: In May, the domestic ABS industry load was high first and then low, and the overall load level was raised from 65% at the beginning of the month to 70% in the middle of the month, and fell back to 61% at the end of the month. The average weekly output fell to 110,000 tons at the same time. Although the inventory position level of polymerization enterprises is still high, it has been destocked to a certain extent, and the supply in the market is still at a relatively abundant level. At the same time, the recent news of the release of new equipment capacity of two companies still has a certain suppressive effect on the support of the industry supply side, and the market still has certain supply pressure. On the whole, the supply side has warmed up to support the spot price of ABS.

Cost factors: In May, the three upstream materials of ABS (acrylonitrile, butadiene, and styrene) rose and then fell back, which improved the support for the cost side of ABS.

In terms of acrylonitrile, domestic supply gradually shrank in the first half of the month, spot resources were limited, and multiple terminal product export orders finally rebounded rapidly. Enterprises locked in profits by stocking up, and factories responded quickly to raise spot prices. As the substantial demand of downstream is met, the upward trend is blocked. In the long run, there is still new production capacity to be put into use, so the market fluctuated and fell at the end of the month.

In May, the domestic butadiene market price rose and then fell. The macro-favorable factors such as tariffs in the middle of the month boosted the atmosphere of the spot market. Some units had unplanned maintenance, and the supply of ports was tight, which made the supply of butadiene market tight. The butadiene market heated up, and the market trading atmosphere began to turn weak after the price rose to a high level. In the second half of the month, the downstream synthetic rubber futures market weakened, and the market demand was weak. The supply of ports in East China arrived in a concentrated manner, and the supply returned to a loose state, until the price of butadiene fell significantly.

At the end of May, the domestic styrene market rose and then consolidated. Influenced by the consensus reached in the high-level economic and trade talks between China and the United States during the month, the foreign pure benzene followed the rise in international oil prices, and the market sentiment quickly improved due to the accelerated destocking of styrene ports. In the future, the arrival of more goods at the main ports in East China, coupled with the continued high supply from South Korea, led to greater pressure on destocking, and the price center of gravity moved downward. Secondly, the downstream inventory of styrene was high, demand was weak, and some units ended maintenance ahead of schedule. The increase in supply further suppressed the rise in styrene prices. It is expected that the styrene market will operate weakly in the short term.

Demand: Entering May, the load of ABS downstream factories in terms of ABS terminals was generally flat, and the purchasing logic tended to bottom-fishing and just-needed orders, resulting in sluggish new orders and slow supply flow. In the mid-month, the two sides reached an agreement on reducing tariffs in the China-US talks, which was good for the commodity market. The export market in the fields of small household appliances and consumer electronics was significantly boosted in the macro sense. The export orders of ABS terminal factories rebounded rapidly, and the load also rose accordingly, and the trading volume in the market increased immediately. At the end of the month, the macro-favorable factors gradually came out, the liquidity of the supply cooled down, and the inventory position was high, there was a large space for destocking in the market, and there was no tight supply. Overall, the demand side supported the ABS market slightly in May.

Market forecast

The domestic ABS market fluctuated in May. The prices of the three upstream materials (acrylonitrile, butadiene, and styrene) rose first and then fell, and the production load of the ABS polymerization plant was reduced. The comprehensive support from the cost side and the demand side was acceptable.

Analysts from SunSirs believe that the suspension of Sino-US tariffs in the middle of the month and the restoration of the export window have contributed to the surge in spot prices in the middle of the month. However, as the market has been heating up, the industry has returned to a cautious attitude. At the end of the month, it returned to the consolidation under the dual pressure of cost and demand. It is expected that the ABS market may continue to consolidate in the short term.

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