Entering the Off-Season for Consumption, ABS Prices Continue to Fall in May

June 1st, according to the news,

In May, the Chinese ABS market continued to experience a fluctuating downward trend, with spot prices for most grades being reduced. According to Spotcom data, as of May 31, the average price of ABS sample products was 9,900 CNY/ton, a decrease of 11.45% from the beginning of the month.

Fundamental Analysis

Supply Level: Entering May, the Chinese ABS industry saw a mix of plant maintenance and resumptions, with the overall operating rate fluctuating at low levels throughout the month, ending at around 59% by the end of the month. The current weekly average production is less than 130,000 tons, with finished goods inventory hovering around 200,000 tons. Shipments from polymer plants declined gradually during the month, but there is an expectation of a slight increase in production in the short term. Overall, the supply side of ABS provided moderate support to the spot price in May.

Cost Factors: Since May, there have been frequent reports of a preliminary peace agreement between the U.S. and Iran in the Middle East, with high-level officials from both sides consistently sending out positive signals. Although it will still take time for shipping through the Strait of Hormuz to fully resume, the market generally expects that the Middle Eastern conflict is likely to ease. The geopolitical stalemate between the U.S. and Iran has caused sharp fluctuations in risk premiums, leading to a sharp drop in oil prices after a mid-month surge, followed by another significant decline in the latter half of the month. As a result, the cost of the three upstream raw materials used in ABS—a key product in the petrochemical chain—has also been dragged downward. Although overseas supply of acrylonitrile remained tight throughout the month, Chinese industry units undergoing maintenance have gradually resumed operations, raising expectations of an easing of supply. Meanwhile, downstream consumption has shown limited growth, causing acrylonitrile prices to remain stable but trend slightly weaker.

In May, the butadiene market in China experienced a fluctuating and weakening trend. Although the cost support in the market has weakened, some companies have maintained shutdowns for maintenance, and there has been no increase in industry supply; midstream traders still have the intention to hold prices. Additionally, with the recovery of production in the synthetic rubber and other industries in the second half of the month, terminal demand has partially improved. It is expected that the butadiene market may form a bottoming-out force.

The styrene market trend is generally fluctuating and declining. From the perspective of raw materials, pure benzene has been consolidating and is expected to decrease by the end of the month. The consumption of styrene still lacks effective drivers, leading to insufficient momentum for market growth. However, there is still an expectation of a reduction in styrene supply, which may limit the decline in styrene prices in the future.

Demand Side: During the May period, the operating conditions of downstream ABS enterprises showed limited changes. The main end-use appliance industry is gradually entering the off-season, resulting in moderate consumption of appliance housings and no visible improvement in the profitability of end-user companies. Market sentiment is characterized by a preference for buying at higher prices rather than lower ones, leading to a significant reduction in restocking and position-building activities. Meanwhile, traders who previously secured profits are engaging in low-price liquidation to recover capital, while buyers remain highly reluctant toward high-priced supplies. Overall, demand-side support for ABS prices remains weak.

Future Market Prediction

In May, the ABS market in China continued to decline. The production load of polymer plants fluctuated slightly, and the domestic supply remained abundant. The cost of the three raw materials was weakly adjusted. Currently, the ABS market is overshadowed by weakening demand. At present, the spot price has loosened, and the trading in the market is relatively quiet.

Technical Analysis

Analysts believe that according to the SpotCommodity display, the moving averages were entangled in the first half of May. On May 14th, the 10-day moving average of ABS crossed below the 20-day moving average, but the difference between the averages gradually stabilized. Additionally, the auxiliary indicators show that the five price levels of ABS are all at recent lows and further out at moderate lows. It is judged that the possibility of a weak consolidation and downward trend in the spot price in the short term has increased. For future market conditions, it is recommended to closely monitor the international crude oil situation and maritime shipping conditions in the Middle East.