AS Price to Fluctuate at Lows in Q2
In Q1, 2023, the AS market fluctuated and went down. Amid the pressure of oversupply, the AS market was weak. During the period, the competition between general materials and mid-to-high-end materials intensified, and the price spread narrowed.
In Q1, the newly added ABS capacity reached 1,200kt/a. Most newly added ABS units produced AS at the early stage, so the AS supply went up notably in the short run. Sales pressure increased, while the downstream demand was weak. Thus, the AS price fluctuated downward amid the weak supply and demand fundamentals.
In January, the AS market stabilized briefly, and some prices even rose slightly. It was mainly boosted by the recovery of macro expectations and the rise of bulk commodity markets such as the styrene market. From February to March, the AS market price fluctuated and declined. The recovery of demand was slow, and the newly added unit exerted pressure. In Q1, the overall AS (80HF) price in Ningbo was around RMB 9,900-10,500/mt in Q1, averaging RMB 10,213.11/mt, down 5.09% from Q4, 2022.
The theoretical cost of AS was RMB 9,986/mt in Q1. Based on the average price of 80HF in the current quarter, the theoretical profit of mid-to-high-end AS was RMB 227.11/mt. During the period, the price of general AS was mostly below RMB 10,000/mt, so most of them were in a state of loss. With the increase in the output of general AS, the phenomenon of replacing mid-to-high-end AS in the consumption field was increasing, especially in the field of modification. It is relatively easy to replace mid-to-high-end AS with general materials in fields such as modification. Since February, mid-to-high-end AS has declined faster than general AS, and the price spread between the two has been narrowing.
In Q2, the AS price is expected to fluctuate at lows. The price drop of mid-to-high-end AS may be still larger than that of the general AS. In Q2, the newly added ABS unit may reduce somewhat compared with Q1. The AS supply increase may decrease. In the coming period, the demand is estimated to improve. SCI reckons that the overall AS market may perform better than the ABS market in Q2.
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