In mid May, the domestic ABS market showed a significant upward trend, with most grades’ spot prices rising. According to the Commodity Market Analysis System of Shengyi Society, as of May 19th, the average price of ABS sample products was 10812.50 yuan/ton, with an increase or decrease of+0.82% compared to the beginning of May and an increase of 3.47% compared to the first ten days.
Fundamental analysis
Supply level: In mid May, the load of the domestic ABS industry remained stable with small fluctuations, and the overall load level was narrowly reduced from 70% in early May to around 67% currently. The average weekly output is close to 130000 tons, and although the inventory level of aggregation enterprises is still at a high level, it has been reduced to a certain extent, and the on-site supply is still at a relatively sufficient level. At the same time, in the second half of the month, the new installation capacity of the two companies will still have a relaxed impact on industry supply, and there is still some supply pressure in the market. Overall, there has been a narrow improvement in the supply side’s support for ABS spot prices.
Cost factor: In mid May, the trend of ABS upstream materials strengthened, providing significant support for ABS cost side. In terms of acrylonitrile, the maintenance of local units within the interval has led to a tightening of supply, coupled with the rapid rebound of export orders for multiple terminal products. Enterprises have locked in profits by stocking up in advance, and factories have quickly responded by raising spot prices. Analysts believe that downstream substantial demand has been partially met, and the upward trend may slow down.
The domestic butadiene market price has significantly increased recently. Boosted by macroeconomic factors such as tariffs, the atmosphere in the spot market has strengthened. Some units are undergoing unplanned maintenance, coupled with tight port supply, resulting in a tight supply of butadiene in the market. The holding party has a strong mentality of raising prices, hesitating to sell and increasing prices, and the butadiene market is rapidly heating up. At present, the price is high and the trading atmosphere in the market is beginning to fade. It is expected that there will be some room for market correction in the short term, and the overall operation may remain stable, moderate, and weak.
In mid May, the domestic styrene market saw a significant increase. Affected by the consensus reached in the high-level economic and trade talks between China and the United States, international oil prices have risen, and the price of pure benzene has also increased. Coupled with the accelerated destocking of styrene ports, market sentiment has rapidly improved. In the future, there will be an increase in arrivals from the main ports in East China. With the concentrated release of positive news, it is expected that the resistance to styrene’s continued rise will increase, and the short-term market will mainly digest the increase.
On the demand side: On May 12th, with the agreement reached between China and the United States to reduce tariffs during the talks, it is favorable for the commodity market, and the macro level has significantly boosted the export markets in small household appliances, consumer electronics, and other fields. The export orders of ABS terminal factories rebounded rapidly, and the load also increased accordingly, leading to a surge in on-site trading volume. The current liquidity of the source of goods has been activated, and the purchasing logic has shifted towards strong demand for entry and stocking. However, the inventory position was relatively high before, and there was a lot of room for on-site turnover, so there was no tightening situation on the supply side. Overall, the demand side has significantly strengthened its support for the ABS market.
Future forecast
The domestic ABS market rose strongly in mid May. The upstream three material ranges all rose, providing strong comprehensive support for ABS cost side. The production load of ABS polymerization plant has been reduced narrowly, and there is a significant increase in demand in the short term. Business analysts believe that ABS has already fallen to near cost price, coupled with favorable factors such as the suspension of tariffs between China and the United States and the current export window period, which has led to a surge in spot prices in the middle of the month. However, with the recent rise in the market, industry players have returned to a cautious attitude, and in the short term, the market may enter a short-term consolidation operation.
