Bottom-fishing and restocking boost ABS to a rapid rise in mid-January

January 20th, News

In mid-January, the Chinese ABS market saw a rapid rise in prices, with most grades reporting higher spot prices. According to the commodity price analysis system, as of January 20th, the average price of sampled ABS products was 8,800.00 CNY per ton, representing a year-over-year change rate of +6.51%.

Fundamental Analysis

Supply Level: Since January, the load of China's ABS industry has been largely stable with minor fluctuations. Overall, there has been a slight decrease, with some facilities at Zhejiang Petrochemical scheduled for maintenance. The overall operating rate of the industry is around 69.8%, with weekly production close to 150,000 tons. The inventory of polymer enterprises has decreased significantly to around 200,000 tons, and the market supply is tending towards a tight balance. In summary, the supply-demand contradiction in the ABS market has been temporarily alleviated, and the supply side provides moderate support for the spot price of ABS.

Cost Factors: In mid-January, the prices of ABS’s three upstream raw materials showed two increases and one decrease, having a generally positive impact on ABS costs. Among them, the acrylonitrile market remained calm, with fundamentals still leaning toward weakness. Additionally, localized inventory pressure persists; however, there are currently no expectations of supply reductions in the short term, and demand remains lackluster. As a result, major acrylonitrile suppliers have continuously lowered their quoted prices, leading to an expanding price decline in the market.

The butadiene market is showing a significant upward trend. Currently, the stabilization and rebound of crude oil prices at the cost end are strengthening bottom support. On the supply side, plant maintenance, inventory depletion, and linkage with overseas markets are creating multiple positive factors. Meanwhile, high operating rates for cis-1,4-polybutadiene rubber at the demand end are sustaining steady underlying demand. The imbalance between supply and demand is driving the market to rally. In the short term, suppliers are likely to continue their stance of supporting prices, and the operating rates of cis-1,4-polybutadiene rubber plants will probably remain high, providing continued support to the butadiene market. It is expected that the Chinese butadiene market will likely maintain a pattern of high-level fluctuations in the near term.

The styrene market is also witnessing a significant price increase. Currently, industry resumption of work has fallen short of expectations, providing stronger support from the supply side. Meanwhile, overseas styrene plants have been undergoing more maintenance, while inquiries and actual transactions for Chinese styrene exports have surged, further driving down port inventories. The deteriorating situation in the Middle East has pushed up crude oil prices, prompting a corresponding rise in the price of the feedstock, pure benzene. With noticeable improvements in styrene’s fundamentals, the styrene market is expected to remain range-bound at higher levels in the near term.

Demand Side: In mid-January, consumption in the ABS downstream appliance casing industry—the main end-use sector—showed no significant improvement, and terminal enterprises’ profitability remained limited. However, given the previously low spot prices, buyers stepped up their efforts to replenish orders at lower prices. As a result, ABS demand experienced a temporary surge, and the flow of goods improved. Merchants’ inventory levels were rapidly depleted, prompting both manufacturers and traders to adopt higher pricing strategies. Overall, the demand side is providing noticeably stronger support for ABS market conditions.

Future Market Forecast

In mid-January, the price of ABS in China showed a significant increase. The production load of polymerization plants remained largely stable with minor adjustments, while the consumer end continued to release short-covering orders. Analysts believe that the macro-level supply-demand contradiction for ABS still exists, but recently there has been a strong momentum of buying on dips, which has activated market dynamics through increased transactions. At the same time, the strengthening of upstream raw material prices has helped to alleviate supply pressure in the short term. However, due to the recent large price increases, it is expected that buyers' acceptance of prices will decline, and the ABS market may experience a consolidation phase in the future.