Remote Costs Plunge, ABS Prices Drop in the First Half of April

April 14 news

In the first half of April, the Chinese ABS market saw a decline in prices, with spot prices for most grades falling. According to SpotCom data, as of April 14, the average price of ABS sample products was 12,216.67 CNY/ton, a decrease of 4.31% from the beginning of the month.

Fundamental Analysis

Supply Level: Entering April, maintenance in China's ABS industry was relatively concentrated. During this period, the operating rates of companies such as Zhejiang Petrochemical and Yike Chemical were reduced. By mid-April, the overall operating rate of the industry was around 59%, with weekly production below 130,000 tons, and finished goods inventory continued to accumulate above 195,000 tons. In the short term, production is not expected to change much, and the supply within the market is shifting from a tight balance to abundance. Overall, the supply side of ABS provides moderate support to spot prices.

Cost Factors: Since early April, the situation in the Middle East has been volatile, leading to diverging market sentiments among industry players. U.S. crude oil inventories have accumulated beyond expectations, and coupled with OPEC+’s firm stance on production cuts, crude oil futures have plunged simultaneously. Among upstream feedstocks for petrochemical products—including ABS—prices have either stagnated or declined. In particular, the acrylonitrile market is seeing a gradual contraction in domestic demand, with insufficient spot-buying interest. Poor trading activity has curbed further upward momentum in the market, and negotiations in some northern regions have slightly softened. Under localized sales pressure, the market is now expected to trend downward.

In the butadiene market, the one-sided surge in prices has come to an end. Downstream enterprises, such as those producing cis-1,4-polybutadiene rubber, have somewhat curtailed their rigid demand procurement of butadiene. Similar to acrylonitrile, domestic demand remains weak, and the combination of localized supply tightness and the absence of imported supplies makes it difficult for traders to sustain high asking prices. Over the past half month, price levels have continued to decline steadily. We recommend closely monitoring future developments, including fluctuations in costs, progress in plant commissioning and maintenance schedules, and changes in actual downstream transaction volumes.

Styrene prices have been fluctuating and declining. Geopolitical tensions have intensified, causing crude oil prices to fall and then rebound unpredictably. Although overseas pure benzene plants have reduced their operating rates, market sentiment remains divided. Downstream industries are strongly resistant to high prices, and the 3S sector continues to suffer cash-flow losses, leading to a gradual reduction in operational loads. Currently, the market lacks positive guidance, and it is expected that styrene prices will likely follow oil price fluctuations in the short term.

Demand Side: Following the end of the April mini-holiday, the resumption of operations by downstream ABS enterprises fell short of expectations. Consumption in the key end-use sector—electrical appliance casing—remained lackluster, and end-user companies’ profitability showed no signs of improvement. The bullish sentiment in the market has eased, leading to reduced inventory replenishment and position-building activities. Sellers, motivated by profit-taking, have begun to offload their holdings at lower prices, putting downward pressure on price levels. Currently, ABS finished-product inventories continue to rise, and buyer reluctance toward high-priced supplies is growing. Overall, demand-side support for the ABS market remains weak.

Future Market Prediction

In the first half of April, the Chinese ABS market experienced fluctuations with a downward trend. Polymer manufacturers have reduced their production loads, but the supply in the market remains ample. The cost of the three main raw materials has softened. Currently, the ABS market is facing dual negative pressures from high costs declining and weak demand. With a large production capacity base, concentrated maintenance has limited effect on inventory accumulation. At present, the spot price is declining from a high level, and trading in the market is relatively quiet.

Technical Analysis

Analysts believe that according to the data from Spotcom, the current 10-day moving average of ABS is showing a trend of crossing below the 20-day moving average. However, auxiliary indicators show that the 5 price levels of ABS are currently at recent lows and further out at mid-high levels, and they are in an over-sold position for 10 days and an over-bought warning position for 1 year. It is judged that a downward trend in the spot price may form in the short term. For future market conditions, it is recommended to closely monitor international crude oil prices and maritime shipping conditions in the Middle East.