In June, the domestic ABS market experienced a significant decline, with most spot prices of various grades falling sharply. As of June 30th, the average price of ABS sample products was 8700 yuan/ton, a decrease of 10.46% from the beginning of the month.
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Fundamental analysis
Supply level: As we enter June, the domestic ABS industry’s equipment load remains stable with small fluctuations, and the overall operating rate within the range is around 58%. The current weekly average output is 125000 tons. The inventory of finished products will begin to accumulate in the second half of the month, and as of the end of the month, it has approached 240000 tons. The shipment situation of aggregation plants within the range remains sluggish, and there is no expectation of a contraction in production in the short term. Overall, the support for spot prices from the ABS supply side in June is average.
Cost factor: Since June, there have been frequent reports of preliminary peace agreements between the United States and Iran in the Middle East. In mid to late month, high-level officials from both sides intensively released positive signals. Although it will take some time for shipping in the Strait of Hormuz to fully recover, the market predicts that the Middle East is easing, geopolitical premiums are quickly clearing, and oil prices have plummeted. Affected by it, the cost value of the upstream three materials of ABS, which belong to the petrochemical chain, has been dragged. The cost value of acrylonitrile has decreased, and downstream consumption is weak. However, there was a shortage of spot resources in the middle of the month, and at the same time, the industry’s capacity utilization rate declined again, resulting in a brief upward trend in the market in the middle of the month. At the end of the month, there was a basic rebound, and there was a lack of positive guidance for the future market, resulting in insufficient market momentum.
In June, the domestic butadiene market continued to decline, and the focus of market transactions continued to decline, resulting in a sluggish overall trading atmosphere. Although some companies have fulfilled their maintenance obligations, downstream end products have poor profits and there is a lack of inventory expansion operations. The futures market is synchronously following the weakness of spot trading, and the pessimistic trading sentiment in the market continues to spread. The market may still be in a weak downward channel.
Since June, the styrene market has continued to decline. From the perspective of raw materials, the geopolitical premium has fallen, and the market lacks confidence in the demand side, resulting in a weak decline in pure benzene prices. However, the domestic supply of styrene has shifted from tight at the beginning of the month to balanced, and coupled with the lack of effective driving force for styrene consumption, the market lacks upward momentum. In the second half of the month, multiple sets of styrene plants in China will restart and cash in, and the supply is expected to become loose. It is expected that the short-term trend of styrene will be weak and volatile.
On the demand side, there were limited changes in the start of work for downstream ABS enterprises in June. The main terminal appliance industry has entered a off-season, with poor 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. The buyer camp has a high resistance to high priced goods, and merchants follow the market and lower their withdrawal funds. Overall, the demand side has poor support for the ABS market.
post-market forecast
The domestic ABS market continued to decline in June. The production load of the aggregation plant has fluctuated narrowly, inventory has accumulated, and the on-site supply remains within a sufficient range. The overall trend of cost and material is weak. The current cost collapse of ABS, prominent supply-demand contradictions, downward shift in spot prices, and sluggish trading on the market.
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