In July, the domestic ABS market saw a low-level upward trend, with most spot prices of various grades stabilizing after rising. As of July 31st, the average price of ABS sample products was 9616.67 yuan/ton, an increase of 10.75% compared to the beginning of the month.
Fundamental analysis
Supply level: As we enter July, the domestic ABS industry’s equipment load remains stable with small fluctuations, with an overall operating rate of 58% at the end of the month and an average weekly output of around 125000 tons. The inventory location of finished products has been digested and reduced to about 200000 tons. The shipment situation of aggregation plants within the range has slightly rebounded, 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 July is still acceptable.
Cost factor: In July, the United States and Iran reversed their previous positive trend, and there were fluctuations in the Middle East ceasefire agreement. The risk of shipping recovery in the Strait of Hormuz has increased, and there are concerns in the market about international crude oil supply, leading to a rapid return of geopolitical premiums. Combined with the low start of production in the domestic pure benzene market and the tight supply pattern, the price of pure benzene has risen strongly, driving styrene to follow suit. However, the supply and demand expectations are still relatively loose, and the upward space for prices is limited. It is expected that the styrene market will fluctuate weakly in the short term.
Although the acrylonitrile market was suppressed by the combination of high operating rates and low consumption in the first half of the month, the rise in crude oil has provided some support for it. Approaching mid month, the market stopped falling and turned upward. In addition, in the second half of the month, the Zhenhai Refining and Chemical Plant will reduce its load, resulting in a reduction in supply in the East China region. And there will be a 20 day shutdown and maintenance plan for Liaoning Jinfa Technology’s 260000 ton acrylonitrile production line in mid August, which will lead to a reduction in supply and boost the market in the short term. However, the new production capacity of 660000 tons of Zhejiang Petrochemical and 130000 tons of Sino British Petrochemical will be successively implemented, and the oversupply in the future will continue to envelop the acrylonitrile market. At the same time, as demand levels off, the price increase of acrylonitrile in the future may be limited.
The cost sentiment support for butadiene in early July, coupled with the tightening of spot circulation on the market, has heated up the bullish atmosphere in the market, and prices continue to rise; But as raw material prices rise, downstream capacity continues to weaken, and high priced source transactions gradually cool down. In the middle and late months, the positive news on the cost side subsided, negative feedback from downstream emerged, and the market’s willingness to chase higher prices quickly cooled down, causing the market to fluctuate downward from a high level. Suggestions for future market trends include paying attention to the rebalancing of upstream and downstream profits, as well as the fulfillment of traditional demand during peak seasons.
On the demand side, there were limited changes in the start of work for downstream ABS enterprises in July. The main terminal appliance industry is still in the off-season, with poor consumption levels of appliance casings and no improvement in the profitability of terminal enterprises. The relatively concentrated partial replenishment operations in the first ten days have led to increased transaction volume. However, after the stocking is met, the buyer camp’s sentiment returns to resistance to high priced sources, and they tend to take goods as needed. The willingness to chase price increases on the market is average, and merchants follow the market and withdraw funds. Overall, the demand side showed a slight lack of momentum in July.
Future forecast
After the domestic ABS market rose in July, it sorted out. The cost and material trends within the range are relatively strong, and the production load changes of the aggregation plant are relatively narrow. Inventory digestion is still acceptable, and on-site supply remains within a sufficient range. The profit situation of ABS unit price within the range is average, and the resistance to high priced goods at the end of the month has increased. The current market has limited mobility.
| http://www.polyvinylalcohols.com |