In mid January, the domestic ABS market rapidly rose from a low level, with most grades reporting high spot prices. According to the Commodity Market Analysis System of Shengyi Society, as of January 20th, the average price of ABS sample products was 8800.00 yuan/ton, with a year-on-year increase or decrease of 6.51% in price level.
Fundamental analysis
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Supply level: Since January, the domestic ABS industry has had a large and stable load with small fluctuations. The overall performance within the range has slightly decreased, with some units of Zhejiang Petrochemical having maintenance plans in place. The industry’s overall operating level is around 69.8%, and the weekly average production is close to 150000 tons. The inventory position of aggregation enterprises is significantly digested at around 200000 tons, and the on-site supply tends to be tight and balanced. Overall, the supply-demand imbalance in the ABS market has eased in the short term, and the supply side still has sufficient support for ABS spot prices.
Cost factor: In mid January, the upstream three material market of ABS experienced two rises and one fall, which had a positive impact on the cost side of ABS. The news in the acrylonitrile market is calm, but the fundamentals remain weak. In addition, there is local inventory pressure, but there is no expectation of a reduction in the supply side in the short term, and the demand side remains flat. The main suppliers of acrylonitrile have continuously lowered their quotations, and the market decline has expanded.
The butadiene market is showing a significant upward trend. At present, the cost side crude oil prices have stabilized and rebounded, strengthening bottom support. The supply side equipment maintenance, inventory clearance, and external linkage have formed multiple benefits. The demand side Shunding rubber has started to operate at a high level, providing sustained demand. The imbalance between supply and demand has driven the market to strengthen. In the short term, the supplier’s mentality of supporting prices will continue, and the load of the end of line butadiene rubber plant is likely to remain high, providing support for the butadiene market. It is expected that the domestic butadiene market will maintain a high volatility pattern.
The styrene market also saw a significant increase. The current resumption of work in the industry falls short of expectations, and supply side support has been strengthened. The increase in maintenance of overseas styrene plants and the increase in inquiries and actual transactions of styrene exports from China have further driven the depletion of port inventory. The worsening situation in the Middle East has driven up crude oil prices and boosted the price of raw material pure benzene. The fundamental improvement of styrene is significant, and it is expected that the styrene market will consolidate at a high level in the short term.
On the demand side: In mid January, there was no significant improvement in the consumption of ABS’s main downstream electrical appliance shell industry, and the improvement in the profitability of terminal enterprises was limited. However, due to the low spot prices in the early stage, buyers have increased their ability to place additional orders at low prices. The demand for ABS has shown a phased increase, and the flow rate of supply has improved. The inventory location of merchants is rapidly decreasing, and companies and merchants are trying to overestimate. Overall, the demand side has significantly improved its support for the ABS market.
Future forecast
The domestic ABS market showed a significant increase in mid January. The production load of the aggregation plant remains stable with small fluctuations, and the replenishment of empty orders on the consumer side continues to be released. Business analysts believe that the macro level ABS supply-demand imbalance pattern still exists, but the recent trend of buying orders at low prices has been strong, and the trading volume has activated market momentum. At the same time, the upstream three material market is helping to strengthen, easing supply pressure in the short term. However, the recent increase has been relatively large, and it is expected that buyers’ acceptance of prices will decline, which may lead to a consolidation of ABS market in the future.
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