SunSirs: Poor Pre-holiday Stocking, China ABS Market Fluctuates at a Low Level

Entering September, the overall trend of the domestic ABS market continued to consolidate and move weakly, with some spot prices of certain grades lowered. According to the Commodity Market Analysis System of SunSirs, as of September 22, the average price of ABS sample products was 9,925 RMB/ton, with a price level increase or decrease of -1.73% compared to early September.

Supply level: Since September, the domestic ABS industry has experienced a combination of load reduction and restart, with overall load being high, stable, and fluctuating. At the beginning of the month, due to the poor profit situation of the aggregation plant, some enterprises had cost maintenance operations, but the magnitude was relatively narrow. In the middle of the month, there is a return to production capacity in aggregation plants such as Tianjin Dagu. Based on recent short-term repairs by some manufacturers, the industry's load level remains at around 70% with a narrow adjustment, and domestic plant dynamics have limited changes compared to the beginning of the month. The average weekly output is over 140,000 tons, and the inventory position of the aggregation enterprise is at a high level of 240,000 tons, with ample supply maintained on site. Overall, the long-term loose supply pattern in the ABS market remains unchanged, and industry inventory is relatively controllable. Overall, the supply side has weak support for ABS spot prices.

Cost factor: Recently, the upstream three material market of ABS has been generally weak, which has a negative impact on the cost side of ABS. At the beginning of the month, the supply of acrylonitrile in the East China region decreased and prices increased. However, the follow-up of spot transactions has been slow, and the northern maintenance facilities have gradually resumed, resulting in a halt in the rise and subsequent decline of spot prices in the middle of the month. However, spot buying remains in a state of rigid demand, resulting in limited demand growth and a temporary market downturn. However, considering cost pressures and future stocking expectations, the market's downward space in the short term is still limited.

Recently, the domestic butadiene market has been fluctuating and consolidating after a decline. The current domestic production has slightly declined, coupled with limited port arrivals, which has slightly boosted the supply side. However, the downstream synthetic rubber market trend is weak, and buyers' enthusiasm for entering the market is low, lacking demand support. It is expected that the butadiene market will be weak and volatile in the short term. From the expectation of pre holiday stocking demand, there is some upward potential in the butadiene market in the latter half of the year.

Styrene has recently maintained a range oscillation trend. In the first half of the year, domestic factories started operating at a high level, and the raw material pure benzene fell. From the perspective of market performance, the price center of gravity has basically exhausted after the middle of the month. Recently, pure benzene and rising crude oil and styrene port inventories have appeared simultaneously, causing a dilemma between long and short positions in the market. In the future, due to the weak impact of its own fundamentals, styrene may have limited upward space.

On the demand side: In the medium to long term, the downstream factories of ABS have had average loads. The current market still exhibits significant off-season characteristics, and terminal enterprises have not yet started stocking up before the holiday, with logic still maintaining a strong demand for supplementary orders. The consumption of the main downstream electrical appliance shell industry is quiet, and there is no increase in production scheduling. The cautious atmosphere in the external market remains unchanged, and the flow of goods is slow. Domestic inventory levels remain strong at high levels, supply continues to be loose, and there is increased pressure to sell on the market. Overall, there has been no improvement in the demand side's support for the ABS market.

As the holiday approaches, the domestic ABS market remains weak. The upstream three materials may fall or consolidate, and the production load of ABS polymerization plant remains stable with small fluctuations, while consumer demand has not shown any increase. Analysts from SunSirs believe that the long-term drag on spot prices of ABS due to supply and demand contradictions makes it difficult for the market momentum to improve. The current ABS market atmosphere is light, with high resistance to upward movement. It is expected that ABS may continue to decline in the short term.

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