ABS Prices in Asia Remain Low Amid Supply-Demand Imbalance and Weak Cost Support

Towards the end of October, the Asian Acrylonitrile Butadiene Styrene (ABS) market continued to experience downward price pressure driven by persistent supply-demand imbalances and weak cost support. Early-month maintenance brought down the ABS industry’s operating rate, however, production and inventory levels remained stable, with high stock levels seeing little reduction. Although a temporary macroeconomic boost in early October prompted some short positions to unwind, this had minimal impact on inventories, keeping supply levels sufficient and offering only modest support to ABS spot prices.

On the cost side, the lowered prices of ABS upstream materials have further dampened the market. The regional market saw limited consolidation, and expectations of modest supply growth in October, combined with underwhelming downstream demand, reinforced this weakness. Downstream companies have maintained ample inventory, and production activity has fallen short of expectations, restricting any potential increase in overall demand.

The regional demand remains soft across the ABS sector, with the primary terminal demand yet to reach anticipated peak levels for the season. Early October’s macroeconomic optimism spurred short-term buying, but as this effect dissipated, the market returned to a typical off-season trend with a wait-and-see sentiment prevailing. Although the high-temperature holiday for home appliance manufacturers has ended, downstream production is only slowly recovering, and stocking activities are primarily focused on meeting limited production needs. Amid this sluggish demand environment, traders lack confidence in future market trends, leading to fewer warehousing activities and offers pegged to market conditions, contributing to slower inventory movement.

In China, October saw ABS prices soften as weak demand and high inventory levels put additional pressure on the market.

The crude oil prices have experienced significant volatility, driven by geopolitical tensions, economic signals, and production choices from major oil producers across the globe. Oil prices sharply declined, dropping over USD 3 a barrel after Israel's weekend strike on Iran spared Tehran's oil and nuclear facilities. Brent and U.S. West Texas Intermediate (WTI) futures fell to their lowest points since October 1. Brent crude dropped 4.4% to USD 72.70 a barrel, down by USD 3.35, while WTI crude slid 4.6% to USD 68.51, losing USD 3.27 per barrel.

As per ChemAnalyst, the steady operation of ABS polymerization facilities has allowed for some gradual inventory reduction, however, the ongoing supply-demand imbalance persists. With these various bearish factors in play, the ABS market is anticipated to face continued downward pressure in the near term, as it maintains structural challenges and subdued demand.