In early November, the domestic ABS market rose at the beginning of the month and then fell at a high level, with spot prices of various grades experiencing a certain decline. As of November 10th, the average price of ABS sample products was 11816.67 yuan/ton, a decrease of 8.04% from the beginning of the month.
Fundamental analysis
Supply level: As we enter November, the load changes of domestic ABS industry equipment are relatively narrow, and the overall operating rate has slightly increased within the range, but it has not yet exceeded 56%. The current weekly average production is 120000 tons. The inventory of finished products has slightly increased to over 190000 tons, but it is still at a relatively low level. The shipment situation of the aggregation plant within the range is still acceptable, and the profit situation is average. The load reduction operation of future aggregation plants is limited. Overall, the ABS supply side provided sufficient support for spot prices in early November.
Cost factor: The Democratic Party’s victory in the midterm elections earlier this month has somewhat suppressed geopolitical risks. In addition, the escalation of the Middle East conflict last month and incidents such as oil tanker fires in the waters of the Strait of Hormuz have pushed oil prices to high levels, causing a significant drop in current crude oil prices.
Affected by it, acrylonitrile gradually shifted from a larger upward force at the beginning of the month. Upstream propylene prices have rebounded and fluctuated, with weak expectations for the future market. In addition, the relatively loose supply of acrylonitrile and the continued mediocre performance of terminal demand have led to bearish guidance and a decline in spot prices. On the other hand, the continuous loss situation in acrylonitrile production does not rule out the possibility that some units will take production reduction measures in the future, which may limit the decline of acrylonitrile to a certain extent.
Since early November, domestic styrene has experienced a wide decline. The price of raw material pure benzene has plummeted, and there is an expectation of increased supply in the future. Although the overall supply of styrene is tight, downstream acceptance of prices is insufficient, and it is expected that the styrene market will consolidate and operate after a short-term decline.
Although butadiene was also affected by the resonance of the decline in commodity prices led by crude oil in November, the market trend is basically in a state of consolidation and oscillation. Recently, both domestic Lihua Yi and Shandong Haijiang have engaged in load shedding operations, causing supply contraction and dragging down spot prices. At the same time, downstream purchases of essential goods were released after the price fell back to a suitable range, driving the improvement of spot transactions. However, the weakness on the demand side lies in the lack of sustained replenishment power and limited ability to undertake high priced projects.
On the demand side, there was little change in the start of work of downstream ABS enterprises in early November. The profit improvement of the main terminal electrical industry is limited, and the digestion of finished products during the Double 11 Consumer Festival needs to be verified. The buyer camp’s sentiment is resistant to high priced goods, and they can restock at low prices and take as needed. Intermediaries are cautious in speculating and buying at the bottom, and their operations need to be observed. Overall, in early November, the demand side was dominated by rigid demand.
Future forecast
The domestic ABS market rose and then fell in early November. Within the range, the consolidation of raw materials in the third and second categories has suffered a significant setback, resulting in weakened support on the cost side. The production load of the aggregation plant fluctuates narrowly, and the inventory is low. In terms of consumer demand, there is generally no improvement in unit price profitability. The main driving force for the upward trend in the early stage was the stall of remote raw materials, and traders offered discounts and placed orders. There may still be a certain decline in the future market.
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