Weak consumption, ABS market trends declined in mid-May

In mid May, the domestic ABS market was weak, and the spot prices of some grades were lowered. According to data from Shengyishe Spot News, as of May 19th, the average price of ABS sample products was 10700 yuan/ton, a decrease of 4.29% from the beginning of the month.

Fundamental analysis
Supply level: In mid May, there was a mutual occurrence of equipment maintenance and resumption of work in the domestic ABS industry, with an overall operating level of over 58% and a slight increase in overall load. The current weekly average production is less than 130000 tons, and the position of finished product inventory has been adjusted back to within 200000 tons. The shipment situation of the aggregation plant has declined compared to before the holiday, and there is still a slight increase in production expected in the short term. Overall, the ABS supply side’s support for spot prices in mid May is still acceptable.
Cost factor: Since May, there have been frequent reports of preliminary peace agreements between the United States and Iran in the Middle East, with high-level officials from both sides releasing positive signals. The market predicts that the Middle East conflict is likely to ease. But the resumption of shipping in the Strait of Hormuz will take time, and the risk premium dominated by the geopolitical stalemate between the United States and Iran is still present. The accelerated consumption of global oil inventories is driving up the mid month oil price rebound. However, its impact on the transmission of the upstream three materials of ABS, which belong to the same petrochemical chain, is not ideal. Although overseas supply of acrylonitrile continues to be tight, domestic industry maintenance facilities are gradually returning, leading to relaxed supply expectations. At the same time, downstream consumption has not increased significantly, and acrylonitrile prices are consolidating weakly.
The domestic butadiene market fluctuated narrowly in mid May. Although the market has shown a weakening of cost support, the bearish sentiment in the early stage has partially cleared. On the other hand, the industry’s load has decreased, and there are expectations of supply contraction. Combined with the recovery of downstream industries such as synthetic rubber, the sluggish terminal demand has improved to some extent. It is expected that a bottoming force in the butadiene market may form.
The styrene market continues to decline. From the perspective of raw materials, the rebound in crude oil prices is not conducive to the transmission of pure benzene. The consumption of styrene lacks effective driving force, and the market lacks upward momentum. However, there are still expectations of a contraction in the supply of styrene, and it is expected that the decline in the styrene market in the future may be limited as a result.
In terms of demand, there will be limited changes in the start-up situation of downstream ABS enterprises in mid May. The main terminal appliance industry is gradually entering a off-season, with average consumption of appliance casings and no improvement in the profitability of terminal enterprises. The atmosphere inside the venue is buying up instead of buying down, and there has been a significant reduction in replenishing and building positions. However, in the early stages of profit taking by merchants, there was a tendency for them to sell at a lower price and then sell back, while the buyer camp showed a high level of resistance towards high priced goods. Overall, the demand side has poor support for the ABS market.
Future forecast
The domestic ABS market weakened in mid May. The production load of the aggregation plant continues to increase slightly, and the on-site supply remains within an ample range. Cost three materials are weakly organized. The current ABS market is shrouded in a bearish trend of weakened demand. At present, the focus of spot prices is loose, and on-site trading is relatively quiet.