Since July, the overall ABS market trend has continued to be weak, with some grades experiencing a decline in spot prices. According to the Commodity Market Analysis System of Shengyi Society, as of July 31st, the average price of ABS sample products was 10312.50 yuan/ton, with a price level increase or decrease of -2.94% compared to early July.
Fundamental analysis
Supply level: Throughout July, the domestic ABS industry experienced significant fluctuations in load, with the overall load level fluctuating from 66% at the beginning of the month to around 67%. The weekly average production has remained stable at over 120000 tons, and the inventory level of aggregation enterprises at the end of the month has risen to a high of over 220000 tons, with sufficient supply maintained on site. At the beginning of the month, Haijiang Chemical returned to maintenance and Liaoning Jinfa’s new plant capacity was put into operation, accumulating a series of production increases in the second half of the month, including Dalian Hengli, and the industry’s supply side continued to relax. Overall, the long-term loose supply pattern in the ABS market remains unchanged, but fortunately, industry inventory is relatively controllable. Overall, the supply side has weak support for ABS spot prices.
Cost factor: In July, the overall ABS upstream three material market experienced two declines and fluctuations, which limited the support for ABS cost side. The acrylonitrile market remains deadlocked, with enterprise capacity utilization rates and output basically leveling off. Although the Haijiang plant in Shandong is still in a shutdown state, Jilin Petrochemical plans to expand its 260000 ton acrylonitrile plant and put it into operation by the end of July, while Liaoning Jinfa Technology’s 260000 ton acrylonitrile plant will resume operation by the end of July. The expected supply growth continues to affect market sentiment. The overall utilization rate of downstream production capacity has significantly decreased, and enterprises purchase raw materials on demand, resulting in a weakening of overall demand. In addition, with slightly insufficient cost support, it is expected that the acrylonitrile market will remain stagnant in the short term.
The domestic butadiene market fell in the first half of July and then rebounded in the second half. Affected by insufficient demand in the early stage, the main production areas actively exported, resulting in some unsold products in the market, and the ex factory prices of the main refineries were lowered one after another. In the second half of the month, the insufficient arrival of port inventory in the East China region boosted market sentiment, prompting companies to switch to premium transactions. Due to the expected weak fundamentals in the future, the butadiene market may experience overall weak fluctuations.
Styrene fluctuated and fell during July. Upstream crude oil and pure benzene fluctuated, although there was an upward trend at the end of the month, they did not provide sufficient support for styrene. On the supply side, port inventory continues to increase, and downstream three S enterprises are experiencing further losses. Under the pressure of high finished product inventory, they continue to stop and reduce their burden, resulting in a weakened demand for styrene. The current fundamentals of the styrene market are weak and difficult to change, and it is expected to operate weakly in the future.
On the demand side: In the medium to long term, the downstream factories of ABS have had average loads. The current market is in the traditional off-season range, and terminal enterprises maintain a strong demand for supplementary orders. Since July, the market concerns caused by the deterioration of geopolitics in the Middle East have been largely resolved, and industry players are more concerned about the uncertainty of US future tariff policies and their impact on market demand. A cautious atmosphere pervades the market, and the flow of goods is slow. Domestic inventory levels remain high and sideways, with continued loose supply and ample room for on-site turnover. Overall, there has been no improvement in the demand side’s support for the ABS market.
Future forecast
During July, the domestic ABS market remained weak and the consolidation trend continued. The prices of upstream three materials are generally weak, and the production load of ABS polymerization plants is stable with small increases, while the demand side is at a low season level. Analysts from Shengyi Society 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. It is expected that the ABS market will maintain a consolidation pattern in the short term.
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