Global ABS Market Struggles with Demand Headwinds in November 2023

In the first half of November 2023, Acrylonitrile Butadiene Styrene (ABS) prices continued their downward trajectory. This was largely due to dwindling demand from the downstream automotive sector and a global oversupply, which has been restricting price fluctuations in the ABS industry since October 2023. Recent insights highlight the inflation crisis, especially its impact on interest rates, contributing to challenges amongst downstream consumers. As a ripple effect, these market woes restrained the commodity's price momentum in the initial half of November 2023. The global ABS market dynamics underlined the dominance of excess supplies surpassing demand. Despite this oversupply, some traders express optimism, suggesting that ABS overcapacities and low prices might be exhibiting signs of a global recovery.

In the middle of November, the domestic ABS market persisted in a downward trend in the APAC region, experiencing a general decline in spot prices across the Asian countries. The performance of the three upstream materials of ABS varied, including Styrene, Butadiene, and Acrylonitrile, contributing to overall average support for the cost aspect of ABS. The ABS market players have sustained their initial operational stage, leading to ongoing high supply pressure. On the demand side, consumption remains weak, and merchants frequently hold a pessimistic demand outlook for the future market. Moreover, the closing price for the primary US WTI crude oil futures contract dropped by 4.9% per barrel in the third week of November 2023. INEOS Styrolution, a producer of styrene, in collaboration with its joint venture partner Sinopec, has inaugurated a new large-scale ABS (acrylonitrile butadiene styrene) production site in Ningbo, China. According to recent assessments, the plant boasts an annual production capacity of 600,000 tons..

In the European and US markets, the decline in ABS prices during the week ending November 17, 2023, resulted from the subdued domestic and regional demand. The persistently high inflation and interest rates have dampened downstream demand for ABS throughout the month. The drop in oil prices and lower feedstock Styrene prices have further contributed to the depreciation of ABS prices, prompting producers to consider rationalization measures in the short term.

According to ChemAnalyst, ABS prices are expected to experience modest growth in the global economy amid uncertainties in the downstream market and reduced inventory procurement. The analysis suggests that stock volumes are already high, leading market participants to adopt a conventional cautious approach, and a recovery in the ABS downstream business is unlikely in the first quarter of 2024. Additionally, fluctuations are anticipated in upstream Styrene and Butadiene prices in the coming weeks, coupled with expected volatility in crude oil futures prices.