Supply Strong, Demand Weak: ABS Prices Fall in Mid-August in China

August 18, News

In mid-August, the overall trend of the ABS market in China remained weak, with spot prices for some grades declining. According to the commodity market analysis system, as of August 18th, the average price of ABS sample products in China was 10,220 CNY/ton, representing a -0.90% change from early August.

Fundamental Analysis

Supply Level: Since August, the operating rate of China's ABS industry has risen and then stabilized. Previously, the Dalian Hengli plant restarted, and the pipeline purging task at Tianjin Dagushended. Recently, there have been limited changes in plant operations, and the overall operating rate of the industry has remained at 71% from the early part of the month, with a continuously loose supply situation. The weekly average production remains around 140,000 tons, and the inventory of polymer enterprises is also holding steady at a high level of 220,000 tons, maintaining ample supply in the market. Overall, the long-term loose supply situation in the ABS market remains unchanged, and the high inventory levels are temporarily manageable, but some companies may increase their operating rates in the future. In summary, the supply side provides weak support for the ABS spot price.

Cost Factors: In mid-August, upstream ABS raw material prices—acrylonitrile, butadiene, and styrene—generally saw two declines and one period of consolidation, slightly weakening cost-side support for ABS. Although the acrylonitrile industry’s capacity utilization rate dipped during this period, overall supply remained ample, particularly with the recent launch of new production capacity at Jihua. On the cost-support front, increased pressure couldn’t offset the lack of robust spot-buying activity, while localized inventory pressures remained significant. As supply and demand continue to balance against fluctuating costs, the market is expected to remain range-bound and weak in the near term.

The Chinese butadiene market experienced fluctuation and consolidation in mid-August. At the end of last week, the market was boosted by the rise in downstream markets, coupled with the plant maintenance at Fushun Petrochemical, which improved the spot market atmosphere. However, recent arrivals have been relatively abundant, reducing the positive impact on the supply side. The downstream rubber market has shown signs of recovery, providing some support to the market, but overall, it remains characterized by rigid demand procurement. In summary, the benefits for the butadiene market from the supply and demand perspective are limited, and it is expected that the market will mainly exhibit a range-bound fluctuation trend in the future.

In the styrene market, prices have recently entered another downward trend. The supply of raw material pure benzene has tightened somewhat, with Sinopec's plants in East China and South China raising their prices. However, the market response has been insufficient, and the overall trading atmosphere remains somewhat stagnant. Recently, one plant each in South China and North China has restarted, and new production capacity in Shandong has increased output, leading to an overall rise in production. The main downstream sectors, including the three Ss, are operating at low levels for the year, resulting in weak demand. Currently, the fundamental drivers in the styrene market are limited, and it is expected that the market will remain weak in the short term.

Demand Side: For a long time, downstream ABS factories have maintained modest operating rates. Currently, the market is in the traditional off-season period, with end-user companies continuing to fulfill only their essential, immediate needs rather than engaging in proactive restocking. By mid-August, production schedules in the appliance casing industry further contracted, reflecting shrinking consumer demand. Amidst no significant shifts in the broader macroeconomic environment, cautious sentiment persists in external markets, keeping supply flows sluggish. Meanwhile, Chinese inventories remain at historically high levels, yet continue to ease, leaving ample room for destocking within the market. Overall, demand-side support for ABS prices remains unchanged and shows no signs of improvement.

Future Market Forecast

In mid-August, the ABS market in China was relatively weak. The upstream raw materials showed two declines and one fluctuation, while the production load of ABS polymer plants remained stable, with demand at a low season level. Analysts believe that ABS has been dragged down by the supply-demand contradiction for a long time, making it difficult for the spot price to improve. It is expected that in the short term, the ABS market may continue to maintain a weak and stable consolidation trend.