July 14th News
In the first half of July, the Chinese ABS market saw a low-level consolidation followed by an upward trend, with spot prices for most grades experiencing a significant rebound. According to SpotCom data, as of July 14, the average price of ABS sample products was 9,916.67 CNY per ton, representing a 14.20% increase from the beginning of the month.
Fundamental Analysis
Supply Level: Entering July, the plant load in China's ABS industry has been largely stable with minor fluctuations. The overall operating rate within the range is close to 60%, with the current weekly average production around 130,000 tons. Finished goods inventory has significantly decreased, dropping to less than 210,000 tons. The shipment situation from polymer plants within the range has improved, and there is no expectation of production contraction in the short term. Overall, the supply side of ABS in July provides moderate support for the spot price.
Cost Factors: In early June, there were frequent reports of a preliminary peace agreement between the U.S. and Iran in the Middle East. However, recently, the termination of the ceasefire has led to renewed volatility in the situation. The risk of resuming shipping through the Strait of Hormuz has risen, sparking market concerns about the supply of international crude oil and causing geopolitical premiums to rebound rapidly. As a result, pure benzene prices have surged strongly, driving styrene prices higher as well. Meanwhile, inventories in the market are being steadily depleted, and demand-side bottoming-out support remains robust.
Acrylonitrile prices have moved in the opposite direction, with high operating rates and weak downstream consumption putting pressure on spot prices. However, the rise in crude oil and propylene prices has provided some support. As the middle of the month approaches, prices have stabilized after a period of decline. The overall low-demand season is expected to continue until around mid-August. Additionally, new production capacities, including 660,000 tons from Zhejiang Petrochemical and 130,000 tons from Sino-British Petrochemical, will come online, further exacerbating the oversupply in the acrylonitrile market. In the future, aside from external news and supply uncertainties, acrylonitrile prices are likely to remain volatile near the cost line for an extended period.
In the first half of July, the butadiene market in China showed a consolidating and slightly stronger trend. Companies that were previously under maintenance, such as Shenhua Ningmei and Gulei Petrochemical, have gradually resumed operations, leading to an increase in supply. However, due to poor profits for downstream end products, there was little expansion in inventory buildup. The market's wait-and-see sentiment intensified, with transactions mainly consisting of small orders.
Demand Side: In July, the operating status of downstream ABS enterprises showed limited changes. The main end-use appliance industry remains in the off-season, with weak consumption of appliance housings and no visible improvement in the profitability of end-user companies. During this period, there was a slight increase in localized restocking activities; however, buyers remained highly resistant to high-priced supplies, preferring to purchase only as needed and rarely engaging in large-scale inventory building. Overall, there was little willingness to chase price increases in the market, and traders were mainly adjusting prices to match current market conditions in order to recover funds. Taken together, short-term robust consumption provided some support for ABS prices; yet, the absence of sizable forward contracts has left the demand side somewhat lacking in sustained momentum.
Future Market Forecast
In the first half of July, the ABS market in China stopped falling and started to rise. During this period, the costs of the three raw materials diverged, and the production load of polymer plants remained relatively stable. Inventory digestion was significant, but the supply within the market still remained ample. Although there has been a volume of ABS consumption in the past half month, the situation of unit price loss has worsened. The current upward momentum of the market is moderate, and once the support from phased demand fades, the market may face obstacles to further price increases.
Technical Analysis
Analysts believe that according to SpotCom, on July 10th, the 10-day moving average of ABS crossed above the 20-day moving average, and the positive average difference has increased. Additionally, auxiliary indicators show that the 5-tier price of ABS is currently at a high alert position with recent highs and distant lows. It is judged that the possibility of a stronger short-term spot price consolidation has increased, and it is recommended to closely monitor international crude oil and Middle East shipping conditions in the future market.
