Chemical industry prices rise, why is the plastic industry chain alone caught in a price drop vortex?

In recent times, the chemical market has seen a surge in 'price increases', with products such as titanium dioxide and epichlorohydrin continuously reaching new highs. In stark contrast, the plastic industry is undergoing a deep adjustment. Data shows that in the second week of March, out of 46 declining varieties on the chemical commodity decline list,upstream raw materials of the plastic industry chain have completely collapsedreflecting the extreme weakness of terminal demand.

Raw material collapse: Five key materials collectively plummet

Toluene (PS synthesis raw material) plummeted 5.47% in a single week, leading the chemical industry decline

Pure benzene (indirect raw material for PS/ABS) fell 3.37% week-on-week, breaking through the support level

Styrene (core raw material for PS/ABS/EPS) drops by another 1.11%

Caprolactam (PA6 raw material) down by 1.61%

Dongguan market GPPS/Ningbo Taihua 5250 spot price plummeted by 14.3% within 40 days, with a ton price drop of 1570 yuan

ABS leads the decline exposing industry dilemma

As a barometer of the plastic market, the continuous decline in ABS prices has triggered a chain reaction. The first-quarter inventory volume shrank by 30% year-on-year, with over 80% of purchases being for essential needs. Major manufacturers have successively introduced a series of price reduction measures:

The Three Pressures Behind the Failure in Peak Season

cost support collapseWide fluctuations in crude oil weaken petrochemical cost transmission;

demand continues to shrinkhome appliances/automobiles and other major downstream sectors have a start-up rate of less than 70%;

excess capacity intensifiesThe social inventory of ABS in the East China region has hit a two-year high;

industry warningCurrently, the raw material inventory reserve cycle for PS/ABS processing enterprises has been shortened to 5-7 days, a 40% decrease compared to the same period in previous years. Analysts point out that before there is a clear signal of recovery in terminal demand, the plastic market may continue the negative feedback loop of 'upstream price reduction - midstream inventory reduction - downstream wait-and-see'. It is recommended that manufacturers adopt dynamic inventory management and pay close attention to emerging demand sectors such as photovoltaic modified materials.

PA6 hits a new low in recent years

The mainstream spot price of caprolactam in East China is 9,900-10,000 yuan/ton on delivery. The price of raw material caprolactam continues to fall, and the profit from chip production has already turned into a loss. Cost pressures still exist, but there is no improvement in downstream orders. The market is being cautiously observed, with low-price restocking as needed. It is expected that the market will see frequent low-price transactions recently, and the PA6 market will operate in a weak consolidation.