In May, the domestic ABS market continued to fluctuate and fall, with most spot prices of various grades decreasing. According to data from Shengyishe Spot News, as of May 31st, the average price of ABS sample products was 9900 yuan/ton, a decrease of 11.45% from the beginning of the month.
Fundamental analysis
Supply level: In May, the domestic ABS industry saw a combination of equipment maintenance and resumption of work. The overall operating level of the industry fluctuated at a low level throughout the month, remaining at around 59% at the end of the month. The current weekly average production is less than 130000 tons, and the inventory of finished products is around 200000 tons. The shipment situation of aggregation plants gradually declined within the month, and there is still a slight increase in production expected in the short term in the future. Overall, the ABS supply side’s support for spot prices in 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. Although it will take some time for shipping to resume in the Strait of Hormuz, the market predicts that the Middle East conflict is likely to ease, and the geopolitical stalemate between the United States and Iran has led to significant fluctuations in risk premiums. Oil prices surged in the middle of the month and then plummeted again in the second half. Affected by it, the cost value of the upstream three materials of ABS, which belong to the petrochemical chain, has been dragged. Overseas supply of acrylonitrile will continue to be tight within the month, but domestic industry maintenance facilities are gradually returning, leading to relaxed supply expectations. At the same time, downstream consumption is limited, and acrylonitrile prices are weakly consolidating.
The domestic butadiene market fluctuated and weakened in May. Although the market is showing a weakening of cost support, some companies are maintaining a shutdown and maintenance status, and there is no increase in industry supply. Midstream merchants still have the willingness to raise prices. Combined with the recovery of industries such as synthetic rubber in the second half of the month, there has been some improvement in terminal demand. It is expected that a bottoming force in the butadiene market may form.
The overall trend of styrene market is fluctuating and falling. From the perspective of raw materials, pure benzene experienced a decline at the end of the month after consolidation. The consumption of styrene still lacks effective driving force, and the market lacks upward momentum. However, there are still expectations of a contraction in the supply of styrene, and it is expected that the decline in the styrene market in the future may be limited as a result.
In terms of demand: During the May period, there were limited changes in the start-up situation of downstream ABS enterprises. The main terminal appliance industry is gradually entering a off-season, with average consumption of appliance casings and no improvement in the profitability of terminal enterprises. The atmosphere inside the venue is buying up instead of buying down, and there has been a significant reduction in replenishing and building positions. However, in the early stages of profit taking by merchants, there was a tendency for them to sell at a lower price and then sell back, while the buyer camp showed a high level of resistance towards high priced goods. Overall, the demand side has poor support for the ABS market.
Future forecast
The domestic ABS market continued to decline in May. The production load of the aggregation plant has fluctuated narrowly, but the on-site supply remains within a sufficient range. Cost three materials are weakly organized. The current ABS market is shrouded in a bearish trend of weakened demand. At present, the focus of spot prices is loose, and on-site trading is relatively quiet.
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