Before the Spring Festival in January, the domestic ABS market in China showed a positive trend, with spot prices of various grades showing an upward trend. According to the Commodity Market Analysis System of Shengyi Society, as of January 21st, the average price of ABS sample products was 11875 yuan/ton, with a price level increase or decrease of+0.32% compared to the beginning of the month.
Fundamental analysis
Supply level: Before the Spring Festival, the operating rate of the domestic ABS industry decreased compared to the previous period, and the industry load level decreased by about 3% to 7% compared to the first half of the month. Mainly due to the decrease in load of the Tianjin Dagu plant. Recently, the average weekly production has decreased to around 120000 tons, and the inventory level of aggregation enterprises has been simultaneously lowered to 160000 tons. Although the overall pattern of abundant supply of goods remains unchanged, the pre-sales of petrochemical plants before the holiday have been basically completed, and the inventory pressure in the future market has decreased. Overall, the recent supply side has provided sufficient support for ABS spot prices.
Cost factor: Prior to the holiday, the trend of the upstream three materials of ABS showed a narrow consolidation, and the overall support for the cost side of ABS was still acceptable. The domestic acrylonitrile market has maintained a sideways trend recently. In the early stage of low load operation in the industry, it will take some time for supply to return, and the inventory position in the industry is low, resulting in strong prices. Downstream purchasing power has weakened before the holiday, but the overall market performance remains strong at a high level.
Recently, the butadiene market has also remained strong at a high level, and the available supply of goods in the spot market has remained relatively tight. Holders of goods have a strong mentality of raising prices. But with the continuous rise of spot prices in the early stage, the downstream high-level receiving ability gradually declines. At the same time, with the expectation of increased production capacity in the future, it is expected that butadiene may enter a weak consolidation market.
Styrene has recently risen and then leveled off. In late January, the return of styrene plants is common, and there is also a situation of accumulated cargo upon arrival at the port, leading to a relaxation of supply shortages. However, as upstream crude oil prices rise, the future market for styrene is bound to be boosted by raw materials such as pure benzene. Downstream demand remains stable before the holiday, with a focus on price consolidation.
In terms of demand, the export demand for some front-end household appliances in the terminal sector has been completely released, and downstream purchasing power has gradually weakened in the early stage. The terminal factories are gradually going on vacation, and the overall load position has fallen. Entering late January, as the Lunar New Year holiday approaches, some downstream enterprises are stimulated by the rising cost of ABS and are entering the market to purchase, with operations leaning towards pre holiday warehouse building. In addition, with the extension of the national subsidy policy for household appliances to stimulate the market, terminal products in the future may continue to receive policy support. Overall, the demand side has slightly improved its market support.
Future forecast
Before the Spring Festival holiday in January, the domestic ABS market saw an increase. The three upstream materials have leveled off, providing sufficient comprehensive support for the cost side of ABS. The load of ABS polymerization plant has fallen, and the pressure on the supply side has decreased. The demand side is mainly driven by rigid needs, with some warehouse building projects entering the market. Business analysts believe that the ABS market may enter a pre holiday period and stabilize.
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