The Acrylonitrile Butadiene Styrene (ABS) market exhibited a slight upward trend in the Asian market at the start of July 2024, reflecting a dynamic interplay of supply and cost factors. The operating load of the ABS industry was approximately 70% of the previous month's level. Despite impending maintenance and load reduction from companies such as North Huajin and LG Yongxing within the next ten days, the early June boost in production and profitability has led to an abundant overall supply.

Early July witnessed a mixed trend in the upstream raw materials for ABS production, providing substantial cost support. The domestic acrylonitrile (feedstock) market remains sluggish, with stagnant prices amid fluctuating propylene costs and an overall weak downstream demand. Feedstock Acrylonitrile manufacturers were facing low profits, exhibited a clear inclination to raise prices, although market transactions focus on previous quotations and cautious future outlooks.

Conversely, the domestic Butadiene (feedstock) market experienced an uptick, driven by tight supply in the Shandong region, compelling holders to maintain high prices. This price surge has cooled the trading enthusiasm, resulting in a generally sideways market trend. Moreover, the other feedstock Styrene market saw stability, primarily due to significant storage digestion and low unit load expectations, which signal a potential supply decrease.

Demand for ABS remained weak as July commenced. The main terminal demand, particularly from home appliance manufacturers, diminished due to holiday shutdowns and reduced downstream factory operations. Traders who sold ABS at high prices in the previous weeks under producer shelter, now face a calmer market with slower ABS cargo circulation. Consequently, the ABS demand side has not significantly supported market growth.

Additionally, the supply chain has been consistently impacted by operational bottlenecks in the ABS industry, leading to higher charter rates in the APAC region. To cover these additional costs, some surcharges will temporarily increase. Congestion at Singapore's container port, now at its most severe since the pandemic, has begun affecting nearby ports, posing a threat to global supply chains. Shipping rates have increased up to fivefold over the past year, and it is inevitable that some of these costs will be passed on to consumers soon.

Speculations about future supply contraction exist, but overall ABS production capacity loss suggests limited changes in supply pressure. The demand side remains weak, reflecting an off-season market trend with subdued trading.

As per ChemAnalyst, the ABS price trend is expected to be impacted by improved operational confidence. Merchants, capitalizing on this momentum, offered price differentials and ramped up shipments. Consequently, the industry’s overall inventory has seen significant digestion, fostering a speculative atmosphere about future supply contraction. This scenario is likely to support the ABS spot prices in the APAC region.