Global ABS Market Under Pressure from Oversupply and Tepid Demand in November

The Acrylonitrile Butadiene Styrene (ABS) market in both Asia and the USA faced challenges in November, shaped by a combination of oversupply, fluctuating feedstock costs, and subdued demand. In Asia, rising operating rates at ABS production facilities contributed to elevated inventory levels, which, despite some short-term demand boosts from events like China’s "Double Eleven" shopping festival, continued to weigh heavily on spot prices. Meanwhile, the USA market maintained stable ABS prices amidst volatile crude oil trends and geopolitical tensions impacting upstream petrochemical dynamics. The persistent imbalance between strong supply and weak demand underscores the challenges faced by the global ABS market, with limited prospects for immediate recovery.

In Asia, the operating rate of ABS production facilities continued to rise, with the industry's load levels increasing significantly. Despite stabilized inventory accumulation, total stock levels remained high, exerting downward pressure on spot prices. This oversupply scenario reduced supply-side support for ABS prices since mid-November.  The "Double Eleven" shopping festival and government subsidies provided a short-term boost to some ABS sales in China. However, the limited recovery in production levels at home appliance factories and weak stocking activity at terminals kept overall demand tepid. Merchants remained hesitant to establish inventories, opting for market-driven pricing strategies. Moreover, the feedstock Styrene prices remained weak due to average crude oil performance, also influencing the ABS price trend for this timeframe.

The ABS market in the USA maintained steady price levels despite turbulence in upstream crude oil markets. Styrene, a key feedstock for ABS production, exhibited price stability, providing a degree of consistency to the ABS supply chain.

Crude oil futures, a major determinant of petrochemical raw material costs, fell below USD 71 per barrel this week following a sharp 6% rise last week. This fluctuation reflects geopolitical and market-driven factors. Last week’s rally, the largest in two months, was triggered by heightened tensions in the Russia-Ukraine conflict, including Ukraine’s use of advanced Western weaponry and Russia's hypersonic missile retaliation. Concerns over potential supply disruptions caused oil prices to spike before correcting on technical grounds.

Market participants remain cautious, and further oil price movements and their potential impact on the US ABS export prices in the US market.

As per ChemAnalyst, the combined effects of oversupply, mixed upstream cost trends, and weak demand suggest that ABS prices will remain under pressure in both the USA and Asia. The market’s "strong supply, weak demand" pattern is unlikely to change significantly in the short term.  While geopolitical factors and crude oil price fluctuations could influence feedstock costs, the subdued end-user activity and high inventory levels since mid-November point to a continuation of weak trading conditions.