Cost Side Remains Strong; ABS Rises Along with Upstream Prices at End of January

January 26 news

At the end of January, the Chinese ABS market continued to rise, with most grades experiencing fluctuations in spot prices. According to the commodity market analysis system, as of January 26, the average price of ABS sample products was 8,850.00 CNY/ton, with a year-on-year change rate of +7.27%.

Fundamental Analysis

Supply Level: Since January, the load of China's ABS industry has been largely stable with minor fluctuations. Recently, the overall load has slightly decreased. With some plants at Zhejiang Petrochemical undergoing maintenance, the overall operating level of the industry has been adjusted down by about 3% to around 67%, with the weekly average output dropping to 142,000 tons. The inventory of polymer enterprises has remained flat at around 200,000 tons, and the supply within the market is in a tight balance. Overall, the supply-demand contradiction in the ABS market has been temporarily alleviated, and the supply side still provides moderate support to the ABS spot price.

Cost Factors: At the end of January, prices for the three upstream feedstocks of ABS showed two increases and one decrease, having a generally positive impact on ABS costs. Among them, the acrylonitrile market had been relatively quiet in earlier periods, with moderate demand and some local inventory pressure, prompting major suppliers to continuously lower their quotes. Recently, factories in East China have generally reduced production capacity; a unit at Sinopec’s Shilong plant has been shut down, and the Jihua Jieyang plant has temporarily halted operations for maintenance. As a result, supply is starting to decline. Downstream users have begun stocking up at lower prices, and the acrylonitrile market is now stabilizing after hitting bottom.

The butadiene market is showing a significant upward trend. Currently, crude oil prices at the cost end remain relatively high, providing strong bottom support. On the supply side, plant maintenance, depleting inventories, and linkage with overseas markets are creating multiple positive factors. Meanwhile, high operating rates of cis-1,4-polybutadiene rubber are sustaining robust underlying demand. The imbalance between supply and demand is driving the market to strengthen. In the short term, suppliers are likely to continue their stance of supporting prices, and plant utilization rates for cis-1,4-polybutadiene rubber will probably stay elevated, providing ongoing 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 also saw a significant price increase. The current industry resumption of work is below expectations, and supply-side support has strengthened. With an increase in overseas styrene plant maintenance, there has been a surge in inquiries and actual transactions for styrene exports from China, leading to further reduction in port inventory. The situation in the Middle East has bolstered crude oil prices, and the raw material benzene continues to rise. The fundamentals of the styrene market have improved notably, and it is expected that the styrene market will remain at high levels and consolidate in the short term.

Demand Side: At the end of January, consumption in the ABS downstream sector—primarily the electrical appliance casing industry—showed no significant improvement, and terminal enterprises’ profitability remained limited. Earlier, spot prices were at low levels, prompting buyers to take advantage of lower prices and place additional orders. However, recently, spot prices have risen, leading to growing resistance toward high-priced supplies. Overall, demand-side support for the ABS market remains moderate.

Future Market Forecast

At the end of January, the ABS market in China continued to rise. The production load of polymer plants remained largely stable with a slight decrease, maintaining a tight supply-demand balance, and the overall cost side remained strong. Analysts believe that the macro-level ABS supply-demand contradiction pattern still exists, but the strong momentum of buying orders at lower prices in the early stage has alleviated the pressure on production and sales. However, due to the recent large price increases, it is expected that buyers' acceptance of prices will decline, and the ABS market may see a consolidation phase in the future.