SunSirs: Supply Contraction & Weak Demand, Stalemate after China ABS Rise in July

https://www.chemnet.com   Aug 02,2024 SunSirs

After a slight increase in the domestic ABS market in July, it has been consolidating and operating, with most spot prices of various grades experiencing a narrow rise. According to the Commodity Market Analysis System of SunSirs, as of July 31st, the average price of ABS sample products was 12,000 RMB/ton, an increase or decrease of 1.48% compared to the price level on July 1st.

Supply level: In July, the domestic ABS industry generally continued to operate at 70% of the level at the end of last month. In mid month, companies such as North Huajin and LG Yongxing underwent varying degrees of maintenance and load reduction, resulting in a decrease in overall operating rates. The industry average operating rate during the month was 65%. Manufacturers tend to have confidence in their operations and focus on firm product pricing. The monthly production is basically the same as June, and the good news of supply contraction in the middle of the month has been basically exhausted. The overall inventory of the industry has slightly increased in the latter half of the year. Overall, the supply side provides moderate support for ABS spot prices.

Cost factor: In July, the overall trend of ABS upstream materials was weak, which weakened the support for ABS cost side. Among them, the price of acrylonitrile has stabilized at a low level, and production capacity has expanded significantly in the second half of the year, with an increasing supply environment covering the market. The expected trend of acrylonitrile prices is bearish and the profitability of enterprises is not optimistic. However, due to the ongoing cost pressure, major manufacturers have shown a clear intention to raise prices in the second half of the month, and the market downturn has been temporarily postponed. Downstream demand continues to be weak, and at the end of the month, most businesses maintained their previous offers, with no improvement in the weak trend.

The domestic butadiene market fell in July. The good news of tight supply in Shandong region within the month is gradually coming to an end, and at the same time, the planned maintenance of the Sierbang plant is underway. However, the demand for maintaining essential needs is weak, the enthusiasm for entering the market is weak, and there is obvious resistance to price increases. Enterprises have tried to raise prices but have been unsuccessful. The market lacks actual transaction support, and the offer is dragged down and falls. It is expected that the butadiene market will maintain a weak and stable trend in the short term, and there may still be a slight downward trend.

The weak styrene market continued in July, with prices continuing to decline. International oil prices have fluctuated and the pure benzene market has dropped significantly, with poor cost support. In the early stage, the high price of styrene increased buyers' resistance to high-end sources, leading to a decrease in market trading volume. Affected by light trading on the spot side, the bearish mentality of industry players has increased, and the reduction of positions in multiple orders has driven the price of styrene to continue to decline. In addition, with the increase in styrene supply at the end of the month, it is expected that the styrene market will continue to decline slightly.

In terms of demand: As we enter July, there has been no improvement in the main terminal demand for ABS. Some home appliance manufacturers are maintaining holiday shutdowns, and the overall load position of downstream factories is low, with weak stocking operations and a focus on basic needs. In the early stage, traders shipped at high prices, and last week the overall market momentum cooled down, resulting in a slower flow of goods. Overall, the demand side is not providing strong support to the market.

After a narrow increase in domestic ABS prices in July, it remained stagnant. The overall weakness of the upstream three materials has weakened the cost support for ABS. The decrease in load but no decrease in output of the ABS polymerization plant within the month is due to the impact of the new equipment being put into operation. In addition, the weak demand on the demand side and the obvious off-season market situation have led to a slight increase in social inventory, and there is still supply pressure on the market. The current market spot trading momentum is low, and the pre-sale contract situation is not good. Overall, it is expected that the ABS market will be weak and difficult to change in early August.

If you have any questions, please feel free to contact SunSirs with support@sunsirs.com.

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