SunSirs: China ABS Market Are Falling Weakly in Mid October

In October, the overall trend of the ABS market in China declined, and most spot prices of various grades were lowered. According to the Commodity Market Analysis System of SunSirs, as of October 17th, the average price of ABS sample products was 9,620 RMB/ton, with a price level increase or decrease of -2.34% compared to early October.

Supply level: Since October, the operating rate of the domestic ABS industry has remained stable with some increase, and the overall load has remained stable with little fluctuation. The Shandong Haijiang, which was originally scheduled to restart at the end of September, has been postponed to start driving on the 5th of this month. There are currently no maintenance tasks for other aggregation plants in the area or in the future, and the industry load level has narrowly increased by about 3% to 73%. The weekly average production has slightly increased above 140,000 tons, and the inventory level of aggregation enterprises has accumulated at a high level of nearly 260,000 tons, maintaining abundant supply on site. Overall, the long-term loose supply pattern in the ABS market remains unchanged, with industry inventory piling up during the Double Festival period. Overall, the supply side has weak support for ABS spot prices.

Cost factor: In the first half of October, the ABS upstream three materials market collectively fell, which had a negative impact on the ABS cost side. Among them, the supply of acrylonitrile is loose while the demand is flat, and some enterprises have seen an increase in inventory. The acrylonitrile market continues to decline due to oversupply, with prices hitting a new low for the year. There are some buying operations on dips in the current market, but the situation of loose supply is unlikely to improve significantly in the short term, and the market is still difficult to bottom out.

For the past half month, the overall performance of the domestic butadiene market has been weak. The ex factory prices of the main refineries have been widely lowered, and the overall performance of downstream demand is poor. The trend of the synthetic rubber market is weak, and the enthusiasm for entering the market is low. The purchasing intention is weak, and the actual transaction performance in the market is poor, lacking demand support. It is expected that the butadiene market will continue to have a weak trend in the short term. It is recommended to focus on downstream procurement demand.

Styrene also showed a negative trend in the first half of October. The raw material pure benzene market has followed the sharp decline of crude oil, with many bearish positions on the macro level and a significant decline in spot prices. However, domestic factories are generally operating, and the tight supply and demand balance of on-site goods is maintained. In addition, the increase in low-level buyers has led to a synchronous increase in futures trading. In the short term, it is not ruled out that styrene may rebound, but the fundamentals are difficult to provide positive guidance, and the upward potential of the market is limited.

On the demand side: In the medium to long term, the downstream factories of ABS have had average loads. In October, the aggregation plant experienced double inventory accumulation and increased shipping pressure. On the other hand, terminal enterprises have poor enthusiasm for stocking up before and after the holiday, and their logic still maintains the need to supplement 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. The inventory position of merchants is also high, and under the increasing pressure of on-site sales, both enterprises and merchants are offering discounts and taking orders. Overall, there has been no improvement in the demand side's support for the ABS market.

In mid October, the domestic ABS market maintained a downward trend. The overall weakness of the upstream three materials is due to the high and stable production load of the ABS polymerization plant, with little increase in consumption 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 future fundamentals are difficult to show positive results, and many industry players have a bearish mentality. It is expected that there will still be downward pressure on ABS in the short term.

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