November 2nd news
In October, the Chinese ABS market continued to rise, with spot prices for all grades showing a certain increase. According to SpotCom data, as of October 31, the average price of ABS sample products was 12,850.00 CNY/ton, representing a 13.55% increase from the beginning of the month.
Fundamental Analysis
Supply Level: Entering October, the plant load in China's ABS industry showed limited fluctuation, with the overall operating rate slightly decreasing to below 55%, and the current weekly output is within 120,000 tons. The finished goods inventory is relatively low, having decreased to less than 190,000 tons. During this period, the shipment situation of polymer plants was acceptable, but profitability was average. In the future, the reduction in load by polymer plants will be limited, and the supply is expected to remain stable with a slight decrease. Overall, the supply side of ABS in mid-October provided moderate support to the spot price.
Cost Factors: Last month, the escalation of geopolitical tensions in the Middle East and a tanker fire in the Strait of Hormuz both disrupted traffic through the Gulf shipping lanes. Market concerns about potential disruptions to crude oil shipments prompted investors to swiftly price in supply‑side risks. As the geopolitical risk premium rose, market participants increased their exposure to long positions in crude oil. Meanwhile, rising marine insurance premiums were passed down the supply chain, while robust support from a sharp decline in U.S. crude inventories further bolstered prices. The confluence of fundamental dynamics and geopolitical developments pushed oil prices above key resistance levels.
Driven by this, acrylonitrile also gained significant upward momentum within the month. However, the supply was relatively loose during the period, and with terminal demand remaining consistently weak, it led to a tug-of-war between bulls and bears, causing the spot price to fluctuate widely. At the end of the month, merchants continued to hold firm on prices, keeping the spot price stable. The upstream propylene price continued to rise, with no expectation of a sharp decline in the short term. Additionally, as production losses worsen, some facilities may take measures to reduce output, which will also contribute to the increase in acrylonitrile prices at the end of the month.
Since October, the styrene market in China has also been fluctuating. The inventory of pure benzene, the direct upstream product, in the main ports of East China is low. Mid-month delivery of some short positions led to a rise in market prices. At the same time, due to the high price of pure benzene, the cost pressure increased, leading to greater losses in styrene production. As a result, more companies reduced production and supply decreased. By the end of the month, the price increase of pure benzene was offset, but the port inventories were still low, and the expectation of inventory accumulation was not strong, making the overall supply side weak. The three major downstream sectors operated at low loads, showing a strong resistance to high-priced goods. With both supply and demand being weak, the market trading atmosphere was sluggish, and by the end of the month, prices entered a phase of consolidation with a downward bias.
Butadiene prices in October showed a clear two-phase trend. In the first ten days of the month, the market was under pressure and prices briefly declined, mainly due to the release of increased supply and cautious high-price purchases by downstream buyers, leading to weak trading sentiment and merchants reducing prices to sell. After mid-month, some production units temporarily reduced their load or went into maintenance, resulting in a temporary tightening of spot supply, and traders were reluctant to sell, pushing up prices. At the same time, as prices fell to a more acceptable level, rigid demand procurement from downstream sectors picked up, improving spot transactions. The market bottomed out and gradually began to rebound, with prices steadily rising. However, the weakness in demand persisted, and downstream buyers lacked the sustained motivation to replenish stocks, limiting their willingness to accept higher prices, which constrained the price increase. Therefore, the upward trend was relatively moderate, without a rapid surge, and overall, the market saw a steady upward trend with fluctuations.
Demand Side: In October, there were only limited changes in the operating rates of downstream ABS producers. Profitability in the key end‑use appliance sector improved only marginally, and buyers remained reluctant to pay premium prices, opting instead for a just‑in‑time purchasing approach. Speculative buying by traders was subdued, with little willingness to chase higher prices; sellers primarily followed market conditions when liquidating inventory. Overall, demand in October was driven mainly by essential, rigid‑demand needs.
Future Market Prediction
In October, the ABS market in China showed a positive upward trend. During this period, the overall strength of the three main raw materials was relatively high, providing strong support on the cost side. The production load of polymer plants remained within a narrow range, with low inventory levels. However, ABS consumption during this period was moderate, and the improvement in unit profitability was limited. The current upward momentum is mainly driven by the cost at the far end, and it is recommended to closely monitor the crude oil market for future trends.
