In mid August, the overall ABS market continued to trend weakly, with some grades experiencing a decline in spot prices. According to the Commodity Market Analysis System of Shengyi Society, as of August 18th, the average price of ABS sample products was 10220 yuan/ton, with a price level increase or decrease of -0.90% compared to early August.
Fundamental analysis
Supply level: Since August, the domestic ABS industry has seen an increase in load before leveling off. Recently, the device dynamics have been limited, and the overall industry load level has remained at 71% of the first ten days, with the supply side continuing to be loose. The average weekly output remains stable at around 140000 tons, while the inventory level of aggregation enterprises at 220000 tons is also at a high level, and the on-site supply remains abundant. Overall, the long-term loose supply pattern in the ABS market remains unchanged, and the high inventory levels in the industry are temporarily controllable. However, some companies may experience an increase in load in the future. Overall, the supply side has weak support for ABS spot prices.
Cost factor: In mid August, the overall ABS upstream three material market experienced two declines and one oscillation, which had a slightly negative impact on the cost side support of ABS. Although the capacity utilization rate of the acrylonitrile industry in the interval has decreased, the overall supply is still abundant, and Jilin Chemical has launched new production capacity. In terms of cost support, it is not as strong as the insufficient purchasing power of spot goods, and at the same time, there is significant pressure on local inventory. Under the game of supply, demand, and cost, the short-term market amplitude is relatively narrow and the weakness continues.
The domestic butadiene market fluctuated and consolidated in mid August. Last weekend, boosted by the rise in downstream markets and combined with the maintenance of Fushun Petrochemical facilities, the atmosphere in the spot market began to improve. However, the recent arrival of goods at the port is relatively abundant, and the supply side is favorable with discounts. The downstream rubber market has shown signs of recovery, providing some support to the market, but overall maintaining essential procurement. Overall, there is limited positive news for the butadiene market in terms of supply and demand, and it is expected that the market will mainly fluctuate within a certain range in the future.
Styrene has recently entered a downward trend again. The supply of raw material pure benzene has tightened, and Sinopec’s refineries in East and South China have increased their prices. But there is insufficient market follow-up, and the overall trading atmosphere is somewhat stagnant. Recently, styrene production has restarted in both South and North China, with an increase in output from newly added facilities in Shandong, resulting in an overall increase in production. The main downstream three S projects are operating at a low level this year, with weak demand. The fundamental driving force of the current styrene market is limited, and it is expected that the styrene market will remain weak in the short term.
On the demand side: In the medium to long term, the downstream factories of ABS have had average loads. The current market is in the traditional off-season range, and terminal enterprises maintain a strong demand for supplementary orders. In mid August, the production schedule of the electrical casing industry further decreased, and consumption shrank. Without significant changes on a macro level, the cautious atmosphere in the external market remains unchanged, and the flow rate of goods is slow. Domestic inventory levels remain high and sideways, with continued loose supply and ample room for on-site turnover. Overall, there has been no improvement in the demand side’s support for the ABS market.
Future forecast
In mid August, the domestic ABS market was weak and consolidated. Upstream three materials fell and fluctuated, ABS polymerization plant production load remained flat, and the demand side was at a low season level. Analysts from Shengyi Society believe that the long-term drag on spot prices of ABS due to supply and demand contradictions makes it difficult for the market momentum to improve. It is expected that the ABS market will maintain a weak and stable consolidation trend in the short term.
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