Weak Trading, ABS Operates at Low Levels in Early September in China

September 08, News

In early September, the overall trend of the Chinese ABS market remained weak, with spot prices for some grades narrowly declining. According to the commodity price analysis system, as of September 8, the average price of ABS sample products was 10,037.5 CNY/ton, a change rate of -0.62% compared to early September.

Fundamental Analysis

Supply Level: Entering September, the operating load of China's ABS industry has slightly decreased. Due to poor profit conditions for polymer plants, some companies have reduced their production. However, the reduction is relatively small, and with the return of capacity from Tianjin Dagu, overall changes in China's plant operations are limited. The industry's operating load has decreased from 71% at the end of August to 69%. The average weekly production has dropped to 135,000 tons, while the inventory of polymer enterprises has increased to a high level of 235,000 tons, maintaining ample supply in the market. Overall, the long-term loose supply situation in the ABS market remains unchanged, with the high inventory levels being relatively manageable. However, there is no expectation of a supply contraction, so the support from the supply side for the ABS spot price remains weak.

Cost Factors: In early September, upstream prices for ABS’s three key raw materials showed mixed movements, providing only limited support to the cost side of the ABS market. At the beginning of the month, acrylonitrile prices surged, driven primarily by supply-side dynamics. Specifically, unplanned production cuts occurred in the East China region: Zhejiang Petrochemical reduced its output due to a late-August equipment malfunction, while another plant is expected to undergo planned maintenance for about 10 days around mid-September. Meanwhile, Sinochem Quanzhou initiated a partial shutdown of one production line in early August, with a full plant halt potentially occurring by mid-September.

Overall, the acrylonitrile market is anticipated to remain volatile in the near term, characterized by high costs, tight inventory levels, and a shrinking supply as companies scale back operations. However, these positive factors are currently limited and subject to uncertainty. Additionally, weak long-term demand has yet to pick up, making it challenging for the market to sustain an improved supply-demand balance.

The Chinese butadiene market has been affected by fluctuations in the downstream synthetic rubber futures market. At the beginning of September, the butadiene market first fell, then rose, and then declined again, maintaining an overall range-bound trend. Within this range, the operation of butadiene facilities in China has been relatively stable, with little overall change. Downstream enterprises have maintained good operating conditions, providing some support to the market fundamentals. Under the mindset of supply and demand competition, it is expected that the butadiene market will mainly maintain a narrow range-bound trend in the short term.

The current styrene market in China is characterized by strong expectations but weak reality. At the beginning of September, the spot price in China has mainly fluctuated downward, with high production levels and a decline in the price of raw material benzene. However, if the maintenance plans of enterprises proceed as scheduled, and the port inventory of benzene continues to decrease, coupled with an increase in downstream demand, the supply and demand situation in the third quarter is expected to improve seasonally. In the short term, without significant changes in the macroeconomic environment, the styrene market may continue to oscillate weakly.

Demand Side: For a long time, downstream ABS factories have maintained modest operating rates. Currently, the market continues to exhibit clear seasonal weakness, with no noticeable improvement in purchasing activity among end-user companies—demand remains largely driven by essential, spot-order replenishments. At the beginning of September, production schedules in the appliance casing sector showed no signs of expansion, reflecting subdued consumer demand. Meanwhile, cautious sentiment persists in external markets, further slowing the pace of goods flow. Meanwhile, Chinese inventories remain at historically high levels, yet prices continue to ease as supply remains abundant, leaving ample room for inventory reduction within the market. Overall, demand-side support for ABS prices has yet to show any meaningful improvement.

Future Market Forecast

In early September, the Chinese ABS market showed a weak consolidation. The upstream three materials generally experienced mixed increases and decreases, while the production load of ABS polymer plants remained largely stable with slight reductions. The demand side remained at the off-season level. Analysts believe that ABS has been dragged down by long-term supply-demand contradictions, making it difficult for the spot price to gain momentum. Therefore, the current ABS market faces significant resistance to rising and may require some time and space for consolidation. It is recommended to closely monitor the consumption situation on the demand side.