Throughout April, the domestic ABS market continued to decline, with most spot prices of various grades fluctuating downwards. According to the Commodity Market Analysis System of Shengyi Society, as of May 1st, the average price of ABS sample products was 10725 yuan/ton, with a price level increase or decrease of -4.67% compared to early April.
Fundamental analysis
Supply level: In April, the operating rate of the domestic ABS industry was slightly reduced, and the overall load level decreased from 73% at the end of March to the current 65%. The average weekly production has returned to around 120000 tons, and the inventory level of aggregation enterprises has dropped from a high level to around 195000 tons. However, the on-site supply is still at a relatively abundant level. In addition, there are relatively few maintenance plans in the industry in the short term, and some have returned to production capacity, resulting in a profound supply-demand imbalance. Overall, there is limited improvement in the supply side’s support for ABS spot prices.
Cost factor: Since April, the upstream three materials of ABS have shown signs of fatigue, which has not provided good support for the cost side of ABS. At the beginning of the month, some units in the East China and Shandong regions reduced their load or underwent maintenance, resulting in a periodic decrease in supply of acrylonitrile. The inventory pressure in the industry has decreased. However, the domestic acrylonitrile market’s upward trend was hindered in the middle of the month. In addition, the new 400000 ton acrylonitrile plant of Zhenhai Refining and Chemical is also planned to be put into operation in May and June. The consumer end has weakened in stages, and prices have fallen back. With the further deepening of the supply-demand contradiction and the worsening of the loss situation in acrylonitrile production, some production enterprises will be forced to adopt measures such as parking or reducing production, and the market decline may gradually narrow. It is expected that the market price will bottom out in May, but when the market rebounds or how long it will last at the bottom will still be determined by the degree of supply reduction.
The domestic butadiene market fell first and then rose in April. In the early days of the Qingming Festival, some downstream warehouses were replenished, but due to the premium transactions of some bidding sources, as well as the impact of crude oil, tariffs, and port arrival news, the price of butadiene in the mid market significantly declined. At the end of the month, some downstream enterprises made purchases at low prices, and the market trading atmosphere slightly improved, leading to a rebound in the market.
Styrene is also subject to international news such as equivalent tariffs, and the market has experienced a significant decline in the early stage. Recently, due to the recovery of the pure benzene market and the tight balance between supply and demand of styrene, prices have shown a trend of stabilizing and oscillating. In April, there were many centralized inspections of styrene, and the supply side remained tight. Downstream 3S factories had high inventory and limited production. However, in the uncertain market situation of raw materials, the risk of a decline in styrene in the future cannot be ruled out.
On the demand side: As we enter April, the load of downstream ABS factories in the ABS terminal sector is generally flat, and the purchasing logic tends to buy at the bottom and supplement orders for urgent needs. The confidence in the market is weak, and the purchasing atmosphere tends to be wait-and-see. With the depletion of essential orders and pre holiday stock, new order deliveries have noticeably decreased, and the flow of goods has returned slowly. Overall, the demand side has poor support for the ABS market.
Future forecast
The domestic ABS market experienced a stepwise decline throughout April. The upstream three materials are weakly moving, which provides poor comprehensive support for the cost side of ABS. The production pressure of ABS polymerization plant has increased, and the load has been reduced. The weak consumption pattern on the demand side has not improved. Business analysts believe that ABS has fallen to near cost price, and the market has long had strong supply and weak demand. Coupled with the impact of international news such as equivalent tariffs, pessimistic expectations for the future are biased. The bullish trend within the market is hard to find, and there is still a possibility that the market may continue to decline in the short term.
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