Demand Fails to Expand, ABS Struggles Through Golden September

October 06, News

In September, the overall performance of the Chinese ABS market was weak, with spot prices for most grades being reduced. According to the commodity price analysis system, as of September 30, the average price of ABS sample products was 9,850 CNY/ton, a change rate of -2.48% from early September.

Fundamental Analysis

Supply Levels: Since September, China's ABS industry has seen a mix of production cuts and restarts, with overall capacity remaining largely stable but showing minor fluctuations. At the beginning of the month, some manufacturers opted for cost-related maintenance due to poor profit margins, though these adjustments were relatively limited in scope. By mid-month, polymer plants like Tianjin Daguh began reintroducing capacity, while at the end of the month, companies such as Shandong Haijiang and Yulong Petrochemical increased their operating rates. As a result, industry-wide capacity levels fluctuated slightly, eventually stabilizing around 70% by month-end. Meanwhile, Chinese plant operations showed limited changes compared to early September. Weekly average production stayed above 140,000 tons, and polymer inventories remained robustly high at 240,000 tons, ensuring ample supply availability across the market. Overall, the long-term supply outlook for the ABS market remains comfortably relaxed, with industry inventory levels remaining fairly manageable. On balance, however, the supply side continues to exert weak upward pressure on ABS spot prices.

Cost Factors: In September, upstream prices for the three key raw materials used in ABS production were generally weaker, negatively impacting ABS costs. At the beginning of the month, acrylonitrile supply in East China tightened, leading to higher prices. However, spot transactions remained sluggish, and as maintenance shutdowns in northern regions gradually resumed, spot prices halted their upward trend and began to decline in the latter half of the month. Meanwhile, spot buyers continued to prioritize essential purchases, limiting any significant increase in demand and causing the market to experience a temporary pullback. That said, considering ongoing cost pressures and expectations of future inventory replenishment, the market is unlikely to see further substantial declines in the short term.

In September, the butadiene market in China experienced a stepwise decline. During this period, the load of Sinopec's various plants steadily increased, and the listed prices of butadiene by various sales companies loosened and fell. Coupled with the weak trend in the downstream synthetic rubber market, buyers' enthusiasm for entering the market was low. Under the influence of weak demand, it is expected that the butadiene market will mainly show a weak fluctuation trend in the short term, with close attention to post-holiday purchasing demand.

Styrene fluctuated in September. Chinese factories maintained high operating rates, ensuring ample supply in the market and leading to rising port inventories. Downstream buyers remained cautious about entering the market, while traders adopted a wait-and-see approach, resulting in subdued trading activity. Meanwhile, the pure benzene market continued its downward trend. Looking ahead, crude oil prices and raw material supplies are likely to remain relatively stable, but with weak underlying fundamentals, styrene is expected to consolidate at lower levels in the near term.

Demand Side: For a long time, downstream ABS factories have maintained modest operating rates. September, traditionally the peak season for the market, failed to deliver robust demand and continued to exhibit clear signs of off-season conditions. End-user companies have yet to begin pre-holiday stockpiling, as their purchasing behavior remains driven primarily by essential, make-up orders. Meanwhile, consumption in the key downstream sector—electrical appliance casing manufacturers—remains sluggish, with no noticeable increase in production schedules. Meanwhile, cautious sentiment persists in external markets, further slowing the flow of goods. Meanwhile, Chinese inventories remain stubbornly high, keeping supply ample, which is intensifying downward pressure on inventory reduction within the market. Overall, demand-side support for ABS prices shows no signs of improvement.

Market Forecast

In September, the ABS market trend in China remained relatively weak. The overall performance of the upstream three materials was weak, and the production load of ABS polymer plants was largely stable with minor fluctuations, while consumer demand did not see a significant increase. Analysts believe that ABS has been dragged down by the long-term supply-demand contradiction, making it difficult for the spot price to improve. It is expected that the industry's production load will rise, and most industry players have a bearish outlook, leading to more frequent price cuts by merchants to move inventory. It is predicted that in the short term, ABS may continue to decline.