Aug ABS Profits Turn into Losses Again
Introduction: In August, feedstock prices kept fluctuating within narrow ranges. With producers accelerating the price concession, the industry profits turned into losses. In September, feedstock prices may still face downward pressure. In anticipation of the limited demand recovery, the ABS prices are predicted to be impacted more by the cost, and the industry losses may expand further.
The cost side failed to provide effective support.
In August, the feedstock price fluctuated within narrow ranges, providing very limited support to the ABS market. As for styrene, impacted by the falling crude oil price and the successful startup of newly added units, the market sentiment weakened. Supported by the news of the Sino-U.S. tariff postponement and anti-involution policies for certain chemical products, price movements remained low, with narrow fluctuations amid a tug-of-war between bullish and bearish forces. Entering mid-to-late August, influenced by the shift from inventory drawdowns to accumulation at ports and the release of positive supply-side news, prices first fell and then rose. However, by the end of the month, some of the gains were given back, primarily due to profit-taking by earlier long positions, leaving the overall market in a weak pattern. The acrylonitrile market showed a low-range upward movement trend, supported by continuous improvements in supply and demand structure. At the same time, as producers strengthened their stance on supporting prices, market prices edged higher. The butadiene market was boosted by macro-positive factors, leading to relatively strong price movements. Driven by an overall bullish atmosphere in the commodity market, the price fluctuated upward. However, increased import supply and weak downstream buying interest limited the price gains, while downstream factories’ strong resistance to high-priced feedstocks also exerted pressure on prices.
As of August 30, the price of styrene in the Jiangsu market closed at RMB 7,195/mt, down RMB 185/mt MOM. The price of acrylonitrile at East China secondary ports closed at RMB 8,250/mt, up RMB 100/mt MOM. The price of butadiene in the Jiangsu-Zhejiang market closed at RMB 9,425/mt, up RMB 175/mt MOM. Overall, the fluctuation range of upstream feedstock prices for ABS in August was relatively limited, and the overall driving effect remained moderate.
Accelerated price reductions by producers.
In early August, the prices of upstream feedstock for ABS showed a narrow fluctuation pattern, providing periodic support to the ABS cost side. Against this backdrop, ABS producers generally adopted a price stabilization strategy, with market quotation fluctuations narrowing, and the industry average monthly profit remained within a relatively stable range. However, entering mid-to-late August, spurred by positive macro-policy news, the prices of styrene and butadiene experienced short-term rebounds. Among them, the price increase of styrene was limited, primarily due to its port inventory shifting from drawdown to accumulation, which dampened the price rise, followed by a continuation of the weak trend. Butadiene prices, supported by macro-positive factors, fluctuated upward, though the gains were still constrained by increased import supply and weak downstream buying sentiment. Overall, the feedstock side did not lend effective support to the ABS market, and the end demand remained in the traditional off-season for production. Producers faced obstacles in transferring inventory, leading to gradually mounting stock pressure, which resulted in an increased frequency of ABS EXW price reductions and further intensified industry losses.
As of August 28, the average monthly profit for mid-to-low-end ABS was RMB -233.24/mt, down 258.49% MOM, indicating that the industry as a whole had fallen into a loss-making state. Meanwhile, the market price continued to decline as end demand improvement progressed more slowly than expected, and buying sentiment for restocking became more cautious. On-market transactions were still dominated by small and rigid-demand orders.
ABS industry losses may worsen in September
In September, ABS price trends are likely to continue to be influenced by the upstream feedstock market, with cost-side support potentially weakening further. The feedstock price may face downward pressure next week, which may exert pressure on ABS price movements.
First, the styrene market is expected to exhibit a pattern of increasing supply and weakening demand. Although planned maintenance and reduced operating rates of some units in September may lead to a slightly decrease in industry output, declining demand from the ABS sector, coupled with persistent inventory pressures, is likely to push the price of styrene further downward, reducing its cost support for ABS. Second, the acrylonitrile market supply is anticipated to increase, while demand is expected to remain subdued. Although the traditional peak season may provide some demand support, the commissioning of new units and the restart of overhauled units could gradually intensify supply pressure. Prices may stay low, offering limited cost-driven support for ABS. Finally, the butadiene market faces pressure on both supply and demand fronts. New capacity additions and expected import increases may boost supply, while planned maintenance at some downstream producers could curb demand growth. Prices are likely to continue fluctuating within a narrow range, providing relatively moderate cost support for ABS prices.
Overall, ABS price trends in September may continue to be constrained by downward pressure from the cost side, with limited market fluctuations and prices likely maintaining a narrow-range pattern. From the industry perspective, planned output reductions or maintenance at Zhenjiang Chimei Chemical and Shandong Haijiang Chemical are scheduled for September, while most other units are operating steadily. Industry output may remain high, and coupled with slow inventory digestion in the earlier period, overall supply will be ample. Some downstream export orders are entering the traditional peak season, and consumption is expected to increase. However, as some export orders were already fulfilled in the first half of the year, the actual increase may be limited. With persistent pressure from costs and supply, as well as limited expectations for end demand recovery, sales challenges are likely to persist. ABS prices are expected to fluctuate weakly but within a constrained range, and theoretical industry profits may continue to face pressure.
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