Supply-Demand Contradiction Persists, Making Weak ABS Market Conditions Hard to Reverse

November 18th, according to reports

In mid-November, the Chinese ABS market continued to show a weak trend, with spot prices for most grades being reduced. According to the commodity price analysis system, as of November 17th, the average price of ABS sample products was 8,725.00 CNY/ton, a change rate of -4.59% compared to early November.

Fundamental Analysis

Supply Level: Since November, the operating rate of China's ABS industry has fluctuated, with minor adjustments. In early November, production lines in Jiangsu and Zhejiang provinces were shut down, while in mid-November, the load in Shandong province increased, leading to a slight increase in the overall operating level to 72%, with an average weekly output of around 145,000 tons. The supply in the market remains abundant, with inventories of polymer enterprises holding steady at a high level of 260,000 tons. Overall, the long-term supply surplus in the ABS market remains unchanged, and the support from the supply side for the ABS spot price continues to be weak.

Cost Factors: In mid-November, the upstream market for ABS’s three key raw materials remained generally weak, exerting a predominantly negative impact on ABS production costs. Among them, acrylonitrile showed no significant improvement in fundamentals this week. Overall supply continues to be ample, with companies reporting rising inventory levels. Although spot prices had already hit their recent lows earlier, downstream buyers have largely completed their opportunistic restocking activities at these favorable prices. Fortunately, upstream prices for propylene and synthetic ammonia rebounded this week, pushing up the cost of acrylonitrile production inputs. Meanwhile, downstream sectors are maintaining stable operating rates, but overall market activity remains sluggish. Moving forward, we recommend closely monitoring developments at key production facilities.

In mid-November, the butadiene market in China showed a fluctuating trend. As prices continued to decline, it attracted some downstream buyers to replenish their inventories at lower prices, improving the trading atmosphere in the spot market. Additionally, with suppliers maintaining firm pricing, there was a slight recovery in the market. On the other hand, the actual demand from downstream end-users did not show significant improvement, and the market lacked positive factors for support. It is expected that the butadiene market in China will mainly maintain a consolidating trend in the short term.

The recent styrene market has seen a slight recovery after a decline. Due to weak demand and poor profitability, styrene supply remains low, and ports continue to see regular destocking. Although the loss situation for raw material benzene persists, as prices hit new lows, downstream buyers are entering the market at these lower levels, leading to a slight warming of the market, which has a bottoming effect on the cost side of styrene. Overall, with styrene demand entering the off-season and limited positive factors, it is expected that the styrene market in China will experience a period of consolidation in the short term.

Demand Side: Downstream ABS factories are operating at moderate capacity levels, with overall demand remaining steady but not particularly robust. At the end-user level, companies continue their cautious approach to restocking, primarily focusing on essential replenishment orders, while the flow of goods remains sluggish. Meanwhile, traders’ inventory levels remain stubbornly high, and as pressure mounts to reduce excess stock within warehouses, both manufacturers and retailers continue offering discounts to facilitate sales.

On a broader macroeconomic front, weakening profitability among end-users and ongoing volatility in external markets have dampened consumer activity in the key downstream sector of appliance housing. As a result, production schedules for this segment show no signs of expansion. Additionally, the upcoming Double 11 shopping festival is expected to provide only limited support to industry-wide consumption, as both domestic and international markets remain characterized by cautious sentiment. Overall, demand-side conditions continue to weigh heavily on ABS market dynamics, with little improvement in sight.

Future Market Forecast

In mid-November, the trend of ABS prices in China continued to decline. The production load of polymer plants remained largely stable with minor fluctuations, and consumer demand stayed low. Analysts believe that the long-term supply-demand contradiction in the ABS market has been a persistent issue, dragging down spot prices. At the same time, the weakening of raw material prices has led to a generally negative sentiment among industry players. It is expected that the downward pressure on ABS will continue in the short term.