SunSirs: Fundamental Benefits Are Difficult to Materialize, China ABS Market Gradually Declines in October

In October, the domestic ABS market was weak and spread, and most spot prices of various grades were lowered. According to the Commodity Market Analysis System of SunSirs, as of October 31st, the average price of ABS sample products was 9,145 RMB/ton, with a price level increase or decrease of -7.16% compared to early October.

Supply level: During October, the overall operating rate of the domestic ABS industry remained stable with small fluctuations. Shandong Haijiang, which was originally scheduled to restart at the end of September, has been postponed to start driving on early October 5th. Since then, except for Haijiang, which has reduced its load to 60% again in late September, no other maintenance tasks for aggregation plants have been announced. The industry load level has been slightly raised to around 73%. The average weekly output remains stable at over 140,000 tons. On the other hand, the news of Huajin Chemical restarting the front line and Zhejiang Petrochemical's production increase plan have both pushed up supply expectations. The on-site supply remains abundant, and the inventory position of the aggregation enterprise is close to 260,000 tons, holding firm at a high level. Overall, the long-term loose supply pattern in the ABS market remains unchanged, and the supply side's support for ABS spot prices continues to be weak.

Cost factor: The overall weakness of the ABS upstream three materials market in October has a negative impact on the ABS cost side. Among them, the overall supply of acrylonitrile is loose and the reduction in burden is rare, while the overall demand remains weak and rigid. Buying and purchasing are mainly done as needed, and manufacturers continue to lower prices, resulting in a gradual decline in acrylonitrile. The changes in the future supply side are the direct factors that determine whether the market can truly bottom out, and it is recommended to closely monitor them.

The domestic butadiene market experienced a broad decline in October. After the holiday, the overall operation of the butadiene market was weak, and the ex factory prices of domestic main refineries were generally significantly reduced. The overall performance of downstream demand side is poor, the trend of synthetic rubber market is weak, the enthusiasm for entering the market is low, and the purchasing intention is weak. By the end of the month, under the dual impact of the restart of maintenance equipment and the production of new production capacity, the degree of supply looseness has once again increased, and the external market continues to decline. There are many negative factors in the market, and it is expected that the butadiene market will continue to operate weakly in the near future, with a focus on downstream demand.

The styrene market fluctuated and fell in October, with both new plant production and fluctuations within the range. Overall supply was loose, and port inventories remained high. The price of raw material pure benzene followed the weak trend of crude oil and fell weakly, with limited rebound. The operating rate of downstream industries has slightly rebounded, providing some support, but there has been no significant increase in orders for terminal home appliances and other fields. Market follow-up is limited, and procurement enthusiasm is not high, with overall rigid demand as the main factor. At the end of the month, styrene has fallen to a low level. In the short term, the supply and demand of styrene remain weak, and the styrene market may still be prone to decline but difficult to rise in the future.

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 a double period of inventory accumulation, resulting in increased shipping pressure. On the other hand, due to the weakened profitability of terminal enterprises and the drag of US trade barriers, the consumption of the main downstream electrical appliance shell industry is still in a dormant state, and there is no increase in production scheduling. The cautious atmosphere in the external market remains unchanged, and the industry's export situation is poor. The overall stocking logic still maintains the urgent need for replenishment, and the flow rate of goods is slow. The inventory position of merchants is also high, and under the increasing pressure of on-site sales, enterprises and merchants continue to offer discounts and take orders. Overall, there has been no improvement in the demand side's support for the ABS market.

Future forecast

The domestic ABS market continued to decline in October. The production load of the aggregation plant has been increased, but there has been 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. However, in October, all three upstream indicators fell, and the fundamentals of the future market are unlikely to show positive results. 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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