ABS USD Marker Fluctuated Downward
In May, the decline in the ABS USD market accelerated amid the impact of decreasing costs, weakening fundamentals, exchange rate fluctuations, etc. Against the background of the accelerated capacity expansion in China’s domestic ABS industry, it was also difficult for the ABS market to detach itself from an interconnected world.
Considerable supply of China-origin resources weighed on the price of imported resources
Since April, China’s domestic production of ABS has repeatedly hit record highs, and the supply pressure has escalated again. The downward price of China-origin materials has put pressure on the USD market. In the first half of May, the USD price of ABS was slightly adjusted. In the middle and late half of May, due to the impact of insufficient transaction volume and falling costs, the negotiated price fell again amid the weak buying sentiment. In addition, the cost dropped by more than $100/mt in May, putting a damper on the price. According to the mainstream price in May, the price decline of low-end imported ABS materials was larger than that of high-end materials.
By the end of this month, the mainstream CIF ABS USD prices in Hong Kong were $1,320-1,365/mt. The low-end offers decreased by $70/mt from last month, and the high-end offers dropped by $55/mt from last month. As for feedstock prices, Asian acrylonitrile price was $1,310-1,350/mt (CFR China); Asian butadiene price was $780-850/mt (CFR China); Asian styrene price was $945-965/mt (CFR China). The theoretical cost of ABS by the end of this month was around $1,320/mt, down $104/mt M-O-M.
USD market may remain weak in the short run
Generally speaking, fluctuations in the RMB exchange rate will have an impact on import costs. The decline in the exchange rate of the offshore RMB against the US dollar may bring pressure on enterprises related to foreign trade imports, which in turn may cause such enterprises to reduce their demand for imported goods. The exchange rate of offshore RMB against the U.S. dollar fell in May, reflected by the accelerated price decline in the USD market.
In the medium-to-short term, as the new ABS capacity may continue to be put into use, the competition may continue to escalate, and the oversupply may continue. China-origin resources may continue to squeeze the market share of imported resources by cost and price advantages. Therefore, it is expected that the USD ABS market may be weak in June, and the price will be relatively under pressure.
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