In September, the domestic ABS market fluctuated and prices of various grades of spot goods fluctuated, with an overall increase. As of September 30th, the average price of ABS sample products was 11316.67 yuan/ton, an increase of 5.43% compared to the beginning of the month.
Fundamental analysis
Supply level: As we enter September, the domestic ABS industry’s equipment load remains stable with small fluctuations, and the overall operating rate fluctuates and falls to around 55%. The current weekly average production is within 120000 tons. The inventory position of finished products is still acceptable and has been reduced to less than 190000 tons. The shipment situation of aggregation plants within the range is average, and the profitability is poor. There are still cost reduction operations and supply contraction expectations for future aggregation plants. Overall, the supply side of ABS in September provided sufficient support for spot prices.
Cost factor: The volatile situation in the Middle East in September, the difficulty in implementing a ceasefire agreement, and the push up of international crude oil prices. In the second half of the month, Iran conveyed clear conditions for resuming negotiations to the mediator, and the US and Iranian presidents went to the meeting for direct contact. At the same time, multiple signals marked a substantial diplomatic breakthrough in the ongoing US Iran confrontation. The focus of market trading has shifted from “supply interruption panic” to “situation cooling and supply recovery”. Affected by it, the trend of styrene has shifted from strong to weak. However, in recent days, the shipping passage through the Strait of Hormuz has still dropped to single digits, and the risks have not substantially improved. The market still has concerns about international crude oil supply. The price of pure benzene remains strong, providing a certain boost to styrene.
Although the acrylonitrile market was boosted by the rise in crude oil prices in the middle of the month, the combination of high operating rates and low consumption has suppressed spot prices. In the first half of the year, 660000 tons of new equipment and new production capacity from Zhejiang Petrochemical and 130000 tons from China UK Petrochemical will be successively implemented, leading to oversupply in the acrylonitrile market. At the beginning of the month, after a stagnant downward trend, the cost side bottomed out and stabilized. The current demand follow-up is still sluggish, and the price of acrylonitrile is prone to decline but difficult to rise in the future.
The overall trend of butadiene in September was initially suppressed, then rose, and fluctuated upwards. The core driving force behind the fluctuations in the monthly market is the phased adjustment of the supply and demand pattern, combined with fluctuations in raw material costs, concentrated installation maintenance, and seasonal recovery of downstream demand. At the same time, changes in market sentiment and trading mentality further amplify the market fluctuations, and overall break away from the previously weak operating pattern. In the future, it is necessary to focus on tracking fluctuations in upstream raw material prices, changes in domestic plant operation, and follow-up on downstream terminal demand.
On the demand side, there will be limited changes in the start of work for downstream ABS enterprises in September. 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. The willingness to chase price increases on the market is average, and merchants follow the market and withdraw funds. Overall, there is a slight shortage of demand in September, and there is no clear signal of increased volume during the traditional peak season.
Future forecast
The domestic ABS market fluctuated widely after rising in September. 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 has fluctuated narrowly, with low inventory levels, but the on-site supply remains relatively abundant. The 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.