In early September, the domestic ABS market showed a positive trend, with most grades experiencing an increase in spot prices. As of September 9th, the average price of ABS sample products was 11233.33 yuan/ton, an increase of 4.66% from the beginning of the month.
Fundamental analysis
Supply level: As we enter September, the domestic ABS industry’s equipment load remains stable with small fluctuations, and the overall operating rate within the range is around 57%. The current weekly average production is within 130000 tons. The inventory position of finished products is still acceptable and has been reduced to less than 180000 tons. The shipment situation of aggregation plants within the range is average, with poor profitability. There is still an expectation of contraction in the short term after the supply market. Overall, the ABS supply side’s support for spot prices in early September is still acceptable.
Cost factor: The situation in the Middle East fluctuated in early September, making it difficult to implement a ceasefire agreement. The shipping risk in the Strait of Hormuz is relatively high, and there is concern in the market about international crude oil supply, with geopolitical premiums continuing to rise. Driving the prices of pure benzene and styrene to rise synchronously, while exports remain positive, it is expected that the market may maintain a strong pattern,
Although the acrylonitrile market is supported by the rise in crude oil prices, the combination of high operating rates and low consumption is suppressing spot prices. In the early stage, Zhejiang Petrochemical’s 660000 tons and Sino British Petrochemical’s 130000 tons of new equipment and production capacity will be successively implemented, and the current oversupply is looming over the acrylonitrile market. At the beginning of the month, after a stalemate and consolidation, the market fell and quickly turned downwards. At the same time, the demand is sluggish, and the future price of acrylonitrile is prone to decline but difficult to rise.
In early September, the cost sentiment support for butadiene combined with the tightening of spot circulation in the market has heated up the bullish atmosphere, and prices continue to rise; But as raw material prices rise, downstream capacity continues to weaken, and resistance to high priced goods gradually increases. At the end of the decade, negative feedback from downstream markets emerged, and the market’s willingness to chase higher prices cooled down, leading to a high-level consolidation of the market. 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.
In terms of demand, there will be limited changes in the start of ABS downstream enterprises in early September. The profitability of the main terminal electrical industry has not improved, and the buyer camp’s sentiment has returned to resistance to high priced sources, with a tendency 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, there was a slight shortage of demand in early September, and there was no clear signal of the traditional off-season starting.
Future forecast
The domestic ABS market rose in early September. The cost of the three materials within the range fluctuated, and the production load of the aggregation plant changed narrowly. The inventory is low, but the on-site supply still maintains a sufficient range. Since the beginning of the month, ABS consumption has been average, and the unit price profit situation has not improved. The current market trend is focused on remote cost values, and it is recommended to closely monitor the signals of crude oil and traditional peak season activation in the future.
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