ABS Price Showed a "V" Shape in Q2, 2018

Profits at ABS producers shrank in Q2, 2018.

ABS prices moved in a “V” shape in Q2, 2018. Prices went higher during April and May backed by the peak season. In June, demand for ABS weakened. Inventory level increased, and the import market performed mediocre. As a result, ABS prices edged down. ABS prices in East China averaged at RMB 15,991/mt in Q2, 2018, down 2.26% from RMB 16,361/in Q1, 2018. The lowest price was RMB 15,450/mt in early April, and the highest was RMB 16,300/mt in H1 of June.

ABS price trend in this year has been the opposite of last year. In Q2, 2017, ABS prices fell first and then rallied. Those in 2018 fell back after hitting highs. After May 2017, the operating rates of air conditioning producers increased quickly due to high temperature in North China, driving the ABS prices up uncommonly. In 2018, ABS market performed mediocre during the slack season.

The profits of ABS at producers averaged at around RMB 1,471/mt in Q2, 2018, decreasing by RMB 1,242/mt from that in Q1. Three feedstock prices all went higher in Q2, but the increment in ABS prices was less than that in feedstock prices, thus ABS profits shrank notably.

ABS prices are predicted to recover in late Q3, 2018.

Since mid-July, source said that two ABS producers in East China have maintenance plans, yet it has not been confirmed by the producers. LG Chem Huizhou Petrochemicals will take its 150kt/a ABS unit offline for a 10 days turnaround in early August. During this period, the docking with the second phase of the unit will be carried out.

The speculation atmosphere in the ABS market was getting thicker since H2 of July due to maintenance news, increment in feedstock prices and devaluation of RMB. The price increase was obvious in South China. However, market transactions were mainly among traders. Most downstream small and medium-sized factories still held resistance on ABS prices. As the traditional slack demand season has not ended, the resistance to the price rebound still existed.

As the structure of supply and demand changes, styrene prices are likely to fell back in H1 of August. At that time, market trading of ABS may be limited. In H2 of August, the ABS export market will enter the peak season. Downstream factories will stock up feedstock intensively, thus the ABS prices are predicted to rise.