Cost and consumption both weak, ABS price continues to decline

Fundamental analysis

Supply level: In mid April, the domestic ABS industry experienced a combination of maintenance and resumption of work, with an overall low and stable level. The overall operating level of the industry is slightly increasing at around 60%, with an average weekly output of nearly 130000 tons and finished product inventory rising to 200000 tons. In the short term, there is still a slight expectation of incremental changes in production in the future, and the supply on the market is generally abundant. Overall, the support for spot prices from the ABS supply side has remained flat.
Cost factor: In early April, the situation in the Middle East was volatile, and the mentality of oil market operators was divided. Since mid month, the core logic of the market has rapidly shifted from the previous geopolitical conflict premium to negotiating easing expectations and resonating with negative fundamentals. Combined with the four factors of IEA lowering supply and demand expectations and API inventory surge, international oil prices have plummeted. Affected by it, the upstream three materials of ABS, which belong to the petrochemical chain, all fell. Although the industry load of acrylonitrile is not high, the arrival of cargo at the port is low. But the shrinking domestic demand in the market and the sluggish spot trading have dragged down the price center of gravity. A pattern of weak supply and demand, with prices falling. In late April, the domestic ABS market continued to decline, with most spot prices gradually decreasing. According to data from Shengyishe Spot News, as of April 23, the average price of ABS sample products was 10916.67 yuan/ton, a decrease of 14.49% from the beginning of the month.
There has been a significant decline in the butadiene market. The gradual loosening of cost support and the weak boost of downstream demand have become the core factors driving the market trend. Even if the overall supply of spot goods is tight, it is difficult to hedge the downward pressure brought by weak demand. The industry as a whole presents a game pattern of strong supply and weak demand, with prices falling and adjusting in stages.
The styrene market continues to decline. In the short term, there is an expectation of a reduction in petroleum benzene on the raw material side, especially with a continuous decrease in imported sources. The domestic supply and demand pattern of pure benzene tends to be strong, but it is difficult to offset the guidance brought by the heavy decline in crude oil. However, the current consumption of styrene lacks effective driving force, and the market lacks the motivation to continue rising, which may put prices in a dilemma.
In terms of demand: As we enter late April, downstream ABS enterprises are showing a flat trend in production, with the main terminal electrical housing industry experiencing average consumption and no improvement in terminal enterprise profitability. The atmosphere inside the venue has shifted from chasing gains to killing losses, and there has been a significant reduction in operations to replenish and build positions. Merchants offer lower profits in their profit taking positions, causing a drag on the price center. The current ABS finished product inventory position continues to rise, and the buyer camp’s resistance to high priced goods is expanding. Overall, the demand side has poor support for the ABS market.
future market forecast
In early April, the domestic ABS market continued to decline. The production load of the aggregation plant has generally leveled off, and the on-site supply is still abundant. The cost and material prices have all fallen. The current ABS market is in a dual negative situation of high cost decline and weak demand. Under high production capacity, centralized maintenance has limited suppression on inventory accumulation. At present, spot prices are declining at a high level, and trading on the market is relatively quiet.