In June, the overall ABS market in China experienced two rises and two falls, with some grades experiencing fluctuating spot prices. According to the Commodity Market Analysis System of Shengyi Society, as of July 1st, the average price of ABS sample products was 10625 yuan/ton, and the price level returned to June 1st with a 0% increase or decrease.
Fundamental analysis
Supply level: In June, the domestic ABS industry saw a narrow increase in load, with the overall load level rising from 61% at the beginning of the month to around 66% at the end of the month. The average weekly output remains unchanged at around 120000 tons, and the inventory position of aggregation enterprises remains stable at over 200000 tons, with sufficient supply maintained on site. At the same time, the recent production capacity of new facilities in Daqing Petrochemical has been put into operation, and Haijiang Chemical has resumed operation after maintenance, resulting in an immediate increase in production capacity and a certain suppression of industry supply support. Overall, the long-term loose supply pattern in the ABS market remains unchanged, and current inventory is relatively controllable. The supply side provides average support for ABS spot prices.
Cost factor: As we enter June, the upstream three materials of ABS show mixed trends, and from the end of the month, the market tends to be weak, with limited support for the cost side of ABS. In terms of acrylonitrile, the Zhenhai Refining and Chemical Plant was successfully put into operation within the month, increasing supply and suppressing the decline in spot prices. Driven by favorable raw material market conditions, the spot market price of acrylonitrile has slightly rebounded. However, in the short term, there is a lack of growth space in domestic demand, and the cost support lacks sustainability. Fortunately, the inventory position of the enterprise is low and controllable, and the price of acrylonitrile in the future may remain stable.
The domestic butadiene market fluctuated in June, with an overall downward trend. The current macroeconomic performance is poor, with insufficient support. There are loose expectations on the supply side. The overall demand for downstream synthetic rubber market is biased towards rigid demand, and there is no significant positive support on the demand side. Overall, under the influence of weak fundamentals, it is expected that the butadiene market will operate weakly.
Styrene also fluctuated due to the impact of international oil price trends. However, at the end of the month, the production of pure benzene rebounded, and the supply was relatively wide. Coupled with the restart of some styrene plants, the output and capacity utilization rate both increased month on month, indicating loose supply. In addition, the overall operating rate of downstream 3S is weak, with low profit contraction and high finished product inventory, which has dragged down the demand for styrene. Combined with the easing of the situation in the Middle East, it is expected that the styrene market may weaken in the short term.
On the demand side: In the past month, the load of downstream ABS factories in the ABS terminal has generally remained flat. The current market has entered the traditional off-season, and terminal enterprises maintain a strong demand for supplementary orders. Affected by the worsening geopolitical situation in the Middle East in mid to late June, market concerns pushed up international crude oil prices, and ABS was supported by remote raw materials. At the same time, the China US talks released macro positive news, which had a dual impact on the sentiment of industry players in the market, driving some short positions to be replenished and slightly improving the flow rate of goods supply. However, against the backdrop of weak global economic momentum, demand release is limited, domestic inventory levels remain high, supply continues to be loose, and there is ample room for on-site turnover. Overall, the demand side has limited support and improvement for the ABS market.
Future forecast
The domestic ABS market experienced frequent fluctuations in June. The overall price of upstream three materials is weak, and the production load of ABS polymerization plants has slightly increased, with the demand side at a low season level. Business analysts believe that the ABS market is unlikely to see any improvement in momentum recently due to the release of new production capacity, the decline in crude oil prices, and the impact of the traditional off-season. The pattern of strong supply and weak demand in the industry has been dragging down spot prices for a long time, and it is expected that the ABS market will follow the upstream trend in the short term. It is recommended to closely monitor the upstream trend in the far end.
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