September 9 news
In early September, the Chinese ABS market showed a positive trend, with spot prices for most grades increasing. According to Spotcom data, as of September 9, the average price of ABS sample products was 11,233.33 CNY/ton, representing a 4.66% increase from the beginning of the month.
Fundamental Analysis
Supply Level: Entering September, the plant load in China's ABS industry has been largely stable with minor fluctuations, with an overall operating rate of around 57%, and the weekly average production is within 130,000 tons. The finished goods inventory is at a manageable level, having decreased to less than 180,000 tons. The shipment situation from polymer plants within the period is average, and profitability is poor. There is still an expectation of supply contraction in the short term, and overall, the supply side of ABS in early September provides moderate support for the spot price.
Cost Factors: In early September, geopolitical tensions in the Middle East intensified, making it difficult to implement the ceasefire agreement. Shipping risks in the Strait of Hormuz remain high, fueling market concerns about the supply of international crude oil and driving up geopolitical premiums further. This has prompted synchronized price increases for pure benzene and styrene. Meanwhile, exports continue to perform well. We expect the market to remain relatively strong.
The acrylonitrile market, although supported by rising crude oil prices, is being suppressed by high operating rates and low consumption, which are dragging down the spot price. With new capacities from Zhejiang Petrochemical's 660,000 tons and Sino-British Petrochemical's 130,000 tons coming online, the current acrylonitrile market is overshadowed by oversupply. After a stalemate at the beginning of the month, prices started to decline, and the market quickly turned bearish. Additionally, with weak demand, it is expected that acrylonitrile prices will be more likely to fall than rise in the future.
In the butadiene market, in early September, cost sentiment support and a tightening of spot supply in the domestic market led to a rise in bullish sentiment, pushing prices up continuously. However, as raw material prices increased, the downstream sector's ability to absorb these costs weakened, leading to growing resistance to high-priced goods. By the end of the period, negative feedback from downstream sectors became evident, with the enthusiasm for chasing higher prices cooling down, resulting in a consolidation at high levels. For future market trends, it is recommended to monitor the rebalancing of profits between upstream and downstream sectors, as well as the strength of the traditional peak demand season in China.
Demand aspect: In early September, there was limited change in the operating conditions of downstream ABS enterprises in China. The profitability of the main terminal electrical appliance industry did not improve, and buyers became resistant to high-priced goods, preferring to purchase as needed. The willingness to chase higher prices in the market was moderate, and traders adjusted their strategies to follow the market and recover funds. Overall, the demand in early September was slightly insufficient, with no clear signals of the traditional off-season starting.
Future Market Prediction
In early September, the ABS market in China rose. During this period, the costs of the three main materials showed mixed increases and decreases, with the production load of polymer plants remaining relatively stable. Inventory levels are low, but the supply within the market remains adequate. Since the beginning of the month, ABS consumption has been average, and the profit margin per unit has not improved. The current upward momentum in the market is mainly driven by long-term cost values. It is recommended to closely monitor crude oil prices and signals of the traditional peak season.
