In mid October, the domestic ABS market continued to rise, with spot prices of various grades increasing to a certain extent. As of October 20th, the average price of ABS was 12156.67 yuan/ton, an increase of 7.42% compared to the beginning of the month.
Fundamental analysis
Supply level: As we enter October, the load changes of domestic ABS industry equipment are relatively narrow, and the overall operating rate within the range has been slightly reduced to below 55%. The current weekly average production is within 120000 tons. The inventory position of finished products is relatively low, and has been reduced to less than 190000 tons. The shipment situation of the aggregation plant within the range is still acceptable, and the profit situation is average. The future aggregation plant has limited load reduction operations, and the supply is expected to be stable with a slight decrease. Overall, in mid October, the ABS supply side provided sufficient support for spot prices.
Cost factor: Recently, there has been a tanker fire accident in the waters of the Strait of Hormuz, and the market is concerned about the disruption of waterway traffic. There is a risk of interruption in crude oil transportation, and investors are quickly pricing the supply disturbance risk. The geopolitical risk premium is rising. Combined with the ongoing escalation of the Middle East conflict, market institutions have raised the probability of conflict spread, trading parties have actively increased their long positions in crude oil, and the expected increase in shipping insurance costs has further amplified supply concerns, driving up oil prices. At the same time, the significant decline in US crude oil inventories has provided support, resonating with fundamental and geopolitical news, driving oil prices to break through key pressure levels.
Driven by it, acrylonitrile suppliers continue to raise prices and spot prices remain firm. Upstream propylene prices surged and consolidated, with no expectation of a sharp decline in the short term. At the same time, with the worsening of production losses, it is not ruled out that some units will take measures to reduce production in the future, which will also help increase the price of acrylonitrile. However, due to the current relatively loose supply and the continued mediocre performance of terminal demand, market growth will still be suppressed.
Since October, the domestic styrene market has been fluctuating, with first rising and then falling. The direct upstream pure benzene market price has risen, and the inventory in the main ports of East China is low. Some empty orders for mid month delivery have been replenished, driving the market price center to rise. At the same time, due to the high price of pure benzene and cost pressure, the production of styrene has become increasingly unprofitable, leading to an increase in maintenance and burden reduction enterprises and a decrease in supply. The inventory at the port is also low and the expectation of accumulated inventory is not strong, resulting in a weak overall supply side. Downstream resistance to high priced goods is strong, and the three major downstream loads are operating at low levels. Under the weak supply and demand situation, the market trading atmosphere is weak and prices are falling.
Butadiene is generally oscillating, rising and then falling. In the early stage, domestic spot prices remained relatively high, and the market sentiment of rising prices still exists. However, downstream transaction follow-up was affected by resistance and weakened, and the market subsequently fell under pressure. There is differentiation in regional market conditions, with relatively active supply circulation in Shandong and a stronger wait-and-see atmosphere in the East China market. Overall trading volume is difficult to significantly increase, and there is a more obvious long short game in the market. At present, the cost side is bottoming out at a high level, but the upward drive of butadiene is insufficient. The overall bullish and bearish factors are intertwined, and without sudden equipment maintenance or downstream centralized replenishment benefits, there is little room for a significant rebound in the butadiene market.
In terms of demand, there will be limited changes in the start-up situation of downstream ABS enterprises in mid October. The profit improvement of the main terminal electrical industry is limited, and the buyer camp is resistant to high priced goods, with a tendency to take goods as needed. Intermediary speculation and buying operations are relatively rare, and the willingness to chase price increases in the market is average, with shipments mainly following the market trend. Overall, in mid October, the demand side is dominated by rigid demand.
Future forecast
The domestic ABS market rose positively in mid October. Within the range, the prices of the three raw materials fluctuated, and the overall cost side was relatively strong. The production load of the aggregation plant fluctuates narrowly, and the inventory is low. However, ABS consumption within the range is average, and the unit price profit situation has not improved. The current market trend is focused on the remote cost value, and it is recommended to closely monitor the crude oil market in the future.
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