SunSirs: Demand Has not Increased Significantly, China ABS Market Is Struggling in the Peak Season

In September, the overall domestic ABS market situation was weak, and most spot prices of various grades were lowered. According to the Commodity Market Analysis System of SunSirs, as of September 30th, the average price of ABS sample products was 9,850 RMB/ton, with a price level increase or decrease of -2.48% 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 was a return to production capacity in aggregation plants such as Tianjin Dagu. In the later part of the month, the load of enterprises such as Shandong Haijiang and Yulong Petrochemical increased, and the industry load level fluctuated. At the end of the month, it was basically maintained at around 70%, and the dynamic changes of domestic facilities were limited 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: In September, the ABS upstream three material market was generally weak, which had a negative impact on the ABS cost side. 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 is relatively slow, and the northern maintenance equipment is gradually recovering, so the spot prices will stop rising and fall in the second half 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.

The domestic butadiene market experienced a stepwise decline in September. Within the range, the load of Sinopec's factories has steadily increased, while the listed prices of butadiene by various sales companies have loosened and fallen. Combined with the weak trend of the downstream synthetic rubber market, the enthusiasm of buyers to enter the market is low, and the weak demand side is expected to have a weak and volatile trend in the butadiene market in the short term, with a focus on post holiday procurement demand.

Styrene fluctuated in September. Domestic factories are operating at a high level, with sufficient supply of goods on site and rising port inventories. Downstream stocking into the market is cautious, and traders are watching closely, resulting in weak transactions. The raw material pure benzene market continues to decline, and in the future, the volatility of crude oil and raw materials may be limited. With weak fundamentals, it is expected that styrene will continue to operate at a low level in the short term.

On the demand side: In the medium to long term, the downstream factories of ABS have had average loads. The market in September was not prosperous during the peak season, and the characteristics of the off-season were still significant. The terminal enterprise's pre holiday stocking has not been initiated yet, and the logic still maintains the urgent need 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.

In September, the domestic ABS market remained weak. The overall weakness of the upstream three materials is due to the high and stable production load of the ABS polymerization plant, with little fluctuation, and no increase in consumer demand. 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 industry load is expected to increase in the future, and many businesses are bearish, with a tendency for merchants to lower prices and sell more goods. It is expected that ABS may continue to decline in the short term.

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