July 1st News
In June, the Chinese ABS market showed a significant decline, with spot prices for most grades falling broadly. According to Spotcom data, as of June 30, the average price of ABS sample products was 8,700 CNY/ton, a decrease of 10.46% from the beginning of the month.
Fundamental Analysis
Supply Level: Entering June, the plant load in China's ABS industry remained largely stable with minor fluctuations, with an overall operating rate of around 58%. The average weekly production was 125,000 tons. Finished goods inventory began to accumulate in the second half of the month, reaching nearly 240,000 tons by the end of the month. During this period, the shipment situation from polymer plants remained sluggish, and there was no expectation of a reduction in production in the short term. Overall, the supply side of ABS in June provided only moderate support for the spot price.
Cost Factors: Since June, there have been frequent reports of an initial peace agreement between the U.S. and Iran in the Middle East. In the mid-to-late part of the month, high-level officials from both sides intensively released positive signals. Although it will still take time for shipping through the Strait of Hormuz to fully resume, the market has judged that the situation in the Middle East is tending toward de-escalation, leading to a rapid unwinding of geopolitical premiums and a sharp drop in oil prices. As a result, the cost of the three upstream feedstocks for ABS—also part of the petrochemical chain—has been dragged down. The cost of acrylonitrile has declined, while downstream demand remains weak. However, in the middle of the month, local spot supplies became tight, and at the same time, the industry’s capacity utilization rate fell again, causing prices to briefly rise in the mid-month period. By month-end, prices had largely reversed their gains, and with no positive guidance on the horizon, market momentum has clearly weakened.
In June, the butadiene market in China saw a continuous decline, with the market transaction focus continuously dropping, and the overall trading atmosphere was quiet. Although some companies carried out maintenance as planned, the profit margins for downstream end products were poor, and there were few instances of increased inventory. The futures market also followed the weakening trend of the spot market, and the pessimistic trading sentiment continued to spread, suggesting that the market may still be in a weak downward channel.
Since June, the styrene market has continued to decline. From the raw material perspective, geopolitical premiums have decreased, and the market lacks confidence in demand, leading to a weak decline in benzene prices. Meanwhile, the supply of styrene in China has shifted from being tight at the beginning of the month to balanced. Additionally, styrene consumption still lacks effective drivers, resulting in insufficient momentum for market growth. In the second half of the month, multiple styrene plants in China restarted, leading to a more relaxed supply situation. It is expected that the styrene market will follow a weak and volatile trend in the short term.
Demand Side: In June, the operational status of downstream ABS enterprises showed limited changes. The main end-use appliance industry has entered the off-season, resulting in weak consumption of appliance housings and no 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 new-position-building activities. Buyers are increasingly reluctant to purchase high-priced goods, while sellers are adopting a more flexible pricing strategy, lowering their offers to recover cash flow. Overall, demand-side factors provide little support for ABS market conditions.
Future Market Forecast
In June, the ABS market in China continued to decline. The production load of polymer plants showed a slight fluctuation, with some inventory accumulation, and the supply within the market remained ample. The overall cost of the three main raw materials was weak. Currently, the cost of ABS has collapsed, with a prominent supply-demand contradiction, leading to a downward shift in the spot price focus, and the market transactions are relatively quiet.
Technical Analysis
Analysts believe that according to SpotCom, the 10-day and 20-day moving averages of ABS in June did not converge, with the difference in the averages stabilizing. Additionally, supporting indicators show that the 5-tier prices of ABS are all at low levels. It is judged that the possibility of a weak consolidation in the short-term spot price has increased. For future market conditions, it is recommended to closely monitor international crude oil and Middle East shipping situations.
