Increasing Upstream Values Sparks Surge in the Asian ABS Market

The Asian  ABS (Acrylonitrile Butadiene Styrene) market has experienced an incline at the beginning of March 2024, witnessing a substantial surge in spot prices for two consecutive months amidst higher upstream costs. Presently, demand fundamentals also showed improvement in the downstream home appliance industry in the region, however, insufficient to drive up the ABS prices for this time frame.

Recently, in Asia, the upstream Butadiene market exhibited positivity, driven by tensed situation in the Red Sea region during the holiday period, escalating crude oil risk premiums. The combination of cost-side boosts and external price increases has propelled the ABS market atmosphere, prompting production enterprises to raise their supply prices.

Further this week, the Styrene market experienced a slight pullback following a period of growth. The continual rise in the price of raw material benzene, driven by high crude oil cost, concentrated benefits on the cost side elevating ABS pricing momentum.

Conclusively, the ABS upstream materials demonstrated a relatively strong performance, bolstering the cost side in the first half of March 2024. Decreasing operations at petrochemical plants have alleviated supply pressure. Despite this, the delayed resumption of work by downstream enterprises and the practice of offering discounts in response to increased merchant offers suggest a less optimistic short-term demand outlook. Expectations of hindered growth loom over the ABS market shortly.

In China, post-Spring Festival, the overall trend of ABS upstream materials remained stable, with two increases within a week. The acrylonitrile market displayed stability, albeit impacted by delayed resumption of work by downstream enterprises. Despite a general caution towards high-priced goods among buyers, the anticipation of increased market sentiment upon terminal work resumption offers a positive outlook. Shutdown and maintenance at Zhejiang Petrochemical have led to a decrease in acrylonitrile load, contributing to potential future strength and stability in the ABS supply-demand dynamics.

One week after the Spring Festival, downstream factories, including the home appliance industry, exhibit limited enthusiasm for stocking up on ABS, focusing on demand-driven purchases and inventory digestion. Resistance to post-price increase supply, along with the average resumption of work by enterprises, has led to relatively low consumption by some downstream enterprises. Currently, ABS spot circulation remains average, exerting a flat impact on the ABS market from the demand side.

As per ChemAnalyst, the ABS price is expected to elevate in the short term amidst an anticipated increase in the downstream demand and tight supply side in the line of expensive upstream materials. While the cost dynamics favor an upward trajectory, resistance from regional buyers and concerns across the export market may pose challenges to sustaining significant market growth.