Fundamental Factors Fail to Deliver Positive Momentum; October ABS Prices Gradually Decline

November 03, News

In October, the Chinese ABS market showed a weak trend, with spot prices for most grades being reduced. According to the commodity price analysis system, as of October 31, the average price of ABS sample products was 9,145 CNY per ton, representing a change rate of -7.16% compared to early October.

Fundamental Analysis

Supply Level: During October, the overall operating rate of China's ABS industry remained largely stable with minor fluctuations. The restart of Shandong Haijiang, originally planned for late September, was postponed to October 5th. Apart from Haijiang reducing its load to 60% in the latter part of the month, no other maintenance schedules for polymer plants were announced. The industry's operating rate slightly increased to around 73%. Weekly production averaged above 140,000 tons. On the other hand, the news of Hua Jin Chemical restarting one line and Zhejiang Petrochemical's plan to increase production both raised supply expectations. Market supply remained ample, with polymer enterprises' inventory levels holding steady at a high of around 260,000 tons. Overall, the long-term supply surplus in the ABS market remains unchanged, and the supply side continues to provide weak support for ABS spot prices.

Cost Factors: In October, the upstream market for ABS's three key raw materials remained generally weak, negatively impacting ABS costs. Specifically, acrylonitrile supply stayed ample with few instances of reduced production, while demand continued to be driven primarily by weak, essential needs. Buyers were mostly opting for spot purchases as needed, prompting manufacturers to keep lowering prices—resulting in a stepwise decline in acrylonitrile prices. Going forward, changes in supply conditions will be the direct determinant of whether the market can truly bottom out, so close monitoring is strongly advised.

In October, the butadiene market in China saw a significant decline. After the holiday, the overall operation of the butadiene market was weak, with major refineries in China generally making substantial price cuts. The overall performance of downstream demand was poor, with the synthetic rubber market showing weakness, low enthusiasm for entering the market, and weak purchasing intentions. By the end of the month, the resumption of maintenance facilities and the commissioning of new capacities had a dual impact, further increasing the supply. The external market continued to decline, with many negative factors affecting the market. It is expected that the butadiene market will continue to operate weakly in the near future, with a focus on the situation of downstream demand.

Styrene prices experienced volatile downward movements in October, as new plants came online amid ongoing market fluctuations. Overall supply remained ample, with port inventories remaining high. Meanwhile, the price of raw material pure benzene followed crude oil trends, weakening and declining, though its rebound remained limited. Downstream industries saw a slight increase in operating rates, providing some support; however, orders in end-use sectors like home appliances showed no significant growth, resulting in limited market follow-through and subdued purchasing activity. As a result, demand remained largely rigid across the board. By month-end, styrene prices had already hit their lowest levels. Looking ahead in the short term, the supply-demand dynamics for styrene are expected to remain weak, suggesting that the market is likely to continue trending downward rather than upward.

Demand Side: For a prolonged period, downstream ABS factories have maintained modest operating rates. In October, polymer plants experienced increased inventory buildup following the dual holidays, putting greater pressure on shipments. Meanwhile, driven by weakening profitability among end-user companies and being weighed down by U.S. trade barriers, consumption in the key downstream sector—electrical appliance casing manufacturers—remains sluggish, with no signs of production expansion. Meanwhile, cautious sentiment persists in external markets, further dampening industry export performance. Overall, the market continues to rely primarily on immediate, essential restocking needs, resulting in slow-moving supply flows. As a result, both manufacturers and traders are increasingly offering discounts to facilitate sales amid mounting inventory pressures within the market. Taken together, demand-side support for ABS prices shows no meaningful improvement.

Future Market Prediction

In October, the ABS market in China continued to decline. The production load of polymer plants was increased, but consumer demand did not see a significant increase. Analysts believe that the long-term supply-demand contradiction has been dragging down the spot price of ABS, making it difficult for the market momentum to improve. In October, the prices of the three upstream raw materials all fell, and it is unlikely that there will be any positive fundamentals in the future, leading many in the industry to have a bearish outlook. It is expected that the downward pressure on ABS will still exist in the short term.