In early May, the domestic ABS market experienced a rise followed by a decline, with some grades experiencing a decrease in spot prices. According to data from Shengyishe Spot News, as of May 11th, the average price of ABS sample products was 10950 yuan/ton, a decrease of 2.06% from the beginning of the month.
Fundamental analysis
Supply level: As we enter May, the domestic ABS industry still maintains a relatively concentrated pattern of maintenance, and overall it continues to decline. The overall operating level of the industry has dropped to around 57%, a further decrease of 3% from the end of last month. 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 pre holiday shipment situation of the aggregation plant is good, and there is still an expectation of contraction in production changes in the short term. Overall, the ABS supply side’s support for spot prices in early 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, and shipping in the Strait of Hormuz is expected to resume, gradually narrowing the supply gap. After the holiday, the international crude oil market experienced a severe sell-off, with WTI crude oil and Brent crude oil futures both falling sharply, hitting a two-week low. Affected by it, the upstream three materials of ABS, which belong to the petrochemical chain, are all compressed.. Domestic consumption continues to decrease, with insufficient spot buying and sluggish transactions. However, the shortage of overseas supply of acrylonitrile continues, with high external prices and support for exports. In addition, the strong trend of raw material propylene prices has led to a slight increase in acrylonitrile prices driven by costs.
In early May, the domestic butadiene market experienced a weak downward trend, with an overall trading atmosphere that was quiet. The market showed a pattern of weakened cost support, relatively abundant supply, and sluggish terminal demand. There is a strong bearish sentiment in the market, with supplier quotes continuing to loosen and downstream purchases cautiously lowering prices. Market transactions are mainly based on small orders for essential needs. Due to the weak transaction volume of the bidding goods, the overall downward pressure on the market is obvious, and the short-term market is in a weak adjustment channel.
The styrene market continues to decline. From the perspective of raw materials, pure benzene has fluctuated and fallen recently. Although there are not many imported sources and the domestic supply and demand pattern of pure benzene tends to be strong, it is difficult to offset the guidance brought by the heavy decline in crude oil. However, the consumption of styrene lacks effective driving force, and the market lacks upward momentum. However, there have been frequent inspections and load reductions on the styrene supply side before and after the holiday, which is expected to limit the decline of the styrene market in the future.
In terms of demand: As we enter May, there has been limited change in the operating conditions of downstream ABS enterprises, with average consumption in the main terminal electrical housing industry and no improvement in the profitability of terminal enterprises. The atmosphere inside the venue is buying up, not buying down. At the same time, there is pre holiday inventory that needs to be digested, and the operation of replenishing inventory and building warehouses has significantly decreased. However, there is a tendency for merchants to lower their profit margins, while midstream traders snatch up after the decline in crude oil prices. The buyer camp has a high resistance to high priced goods, which in turn creates a drag on the price center within the range. Overall, the demand side has poor support for the ABS market.
Future forecast
In early May, the domestic ABS market rose and then turned downwards. The production load of the aggregation plant continues to slightly decrease, and the on-site supply remains sufficient. Cost three materials are weakly organized. The current ABS market is shrouded in a bearish shadow of cost decline and weak demand. At present, the focus of spot prices is loose, and on-site trading is relatively quiet.
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