[abs daily review] raw material prices diverge, market consolidates in narrow weak range

I. Today's Summary

Today, the domestic ABS market in China weakened slightly across regions in sync. Mainstream grades in East China and South China saw localized minor downward adjustments in prices, with the overall decline limited. The market is gradually showing a low-level bottoming trend.

Upstream raw material trends have diverged: falling styrene and butadiene prices have dragged down costs, while acrylonitrile has risen sharply against the trend. Overall costs are caught in a tug-of-war between bullish and bearish forces. The industry is operating at a loss, but companies have shown weak willingness to cut production, and maintenance-related output reductions remain limited.

3. Industry operating rates and production expectations are expected to edge up slightly, while manufacturers’ inventories continue to be steadily drawn down, keeping supply pressure relatively manageable. Downstream end-users maintain need-based procurement, with no concentrated restocking, and market transactions remain subdued.

4. Market sentiment has marginally improved, and traders are bottom-fishing for low-priced cargoes. Coupled with limited inventory pressure on manufacturers, there is limited room for a sharp decline in the short-term market, which is expected to mainly fluctuate within a narrow range.

2. Spot Market Overview

(1) Mainstream spot prices saw slight adjustments.

Today, the domestic ABS markets in East China and South China edged down slightly overall, with mixed movements among different grades and relatively narrow fluctuations. In the Yuyao market in East China, quotations for most grades remained stable, with only grade 15E1 falling slightly by RMB 100/ton to RMB 10,500/ton, while other mainstream grades such as 0211, A2020, HI-121H, PA-757K, and 0215A held steady. In the Dongguan market in South China, some prices were adjusted marginally, with 15E1, 121H, 757K, and 0211 offering slight concessions of RMB 20–80/ton, while only DG417 moved against the trend and rose by RMB 100/ton, highlighting clear market differentiation.

Today's market trading was mainly driven by rigid demand, and the overall transaction atmosphere remained subdued. Affected by the overall weakening of raw material prices, market participants are still cautious, but the cost-effectiveness of lower-end cargo has become more evident. Some traders have been bargain hunting at lower levels, leading to some improvement in transactions at low prices. The market is gradually bottoming out and stabilizing, while transactions for high-priced cargo remain weak. Overall, bearish factors in the current market are being gradually digested, downward momentum continues to fade, and a sharp drop is unlikely in the short term.

3. Production Updates

The domestic ABS plants are operating steadily, with both increases and decreases in production. The 200,000 tons/year plant of Shandong Haijiang remains shut down with no restart plans; the 400,000 tons/year plant of Shandong Lihua Yi is operating at 60% capacity, and the overall industry utilization is relatively stable. Currently, the industry is deeply entrenched in a loss-making situation, but there are limited proactive production cuts and concentrated maintenance actions from companies, resulting in a relatively weak contraction on the supply side.

Weekly data is expected to remain relatively stable, with ABS capacity utilization and weekly output both edging up slightly, while industry supply continues to be released steadily. Producers’ inventories continue to decline, gradually easing inventory pressure and providing some support to the price floor, effectively limiting the room for any significant downside in the market.

IV. Related Product Information

StyreneThe East China styrene market is operating weakly. The main contract has shown a lackluster rebound, port inventories have increased slightly, market trading remains sluggish, and the spot negotiation center has moved lower. Spot and near-month contract quotes are maintained at RMB 8,250-8,300/ton, and the overall cost support for ABS has weakened.

AcrylonitrileThe East China acrylonitrile market strengthened against the trend, with mainstream delivered prices at RMB 10,700-10,800/mt, up RMB 300-400/mt in a single day. Supplier offers rose sharply, and the negotiation atmosphere in the market improved, offsetting some of the decline in feedstock prices to a certain extent.

ButadieneJiangsu Jiangyin butadiene prices edged down slightly, with ex-pickup reference prices at 10,450-10,550 yuan/ton, down 125 yuan/ton from the previous period. Market sentiment remained cautious, while downstream rigid demand stayed stable. Traders were not inclined to sell at low prices, and only sporadic small-volume deals were concluded in the market, resulting in a relatively limited decline.

V. Price Forecast

1. Short-term Market Forecast

The domestic ABS market continued in the short term.Narrow-range fluctuations and weak consolidationThe pattern shows that both the upward and downward potential are limited.

Suppressing factors: Prices of styrene and butadiene have weakened, providing insufficient support from the overall cost side; downstream end-user demand is in the off-season, with procurement mainly based on rigid demand and no favorable factors from concentrated restocking, making it difficult for market transactions to increase significantly; industry operating rates and output are steadily recovering, leaving the supply side relatively ample.

Supporting factors: the sharp rise in acrylonitrile prices partially offsets the cost-side bearish pressure; low-priced supplies in the industry are seeing bargain-hunting demand, and the market is gradually bottoming out; manufacturers’ inventories continue to be digested, and inventory pressure remains manageable; amid production losses, companies have weak willingness to sell off goods at deep discounts.

2. Market Outlook

Overall, the current market’s bearish factors have been largely priced in. Coupled with a recovery in low-level trading activity and easing inventory pressure, ABS prices lack sustained downward momentum in the short term. Prices are therefore expected to remain in a narrow range, with price spreads among different grades staying stable and the market generally holding steady with slight fluctuations.

3. Risk Warning

If the three major raw materials rebound collectively, the rise in costs will lead to a stabilization and rebound in ABS prices; however, if end-user demand remains sluggish and raw materials drop sharply again, there may be some room for a slight decline in the market. This analysis is merely a fundamental projection and does not constitute trading or investment advice.