ABS Monthly Report (June 2025)

ABS Monthly Report (June 2025)

This Issue Review

This month's production volume reached 521,000 tons, a decrease of 17,000 tons from the previous month, representing a decline of 3.16%. The operating rate increased by 0.04%, and the capacity utilisation stood at 64.91%. From January to June 2025, the total production volume was 3,222,000 tons, representing an increase of 26.68% compared to the same period last year. Imports in May amounted to 73,400 tons, a decrease of 1.61% from the previous month. Cumulative imports from January to May reached 362,500 tons, a decrease of 12.33% compared to the same period last year. As of the end of June, finished product inventory stood at 210,000 tons, an increase of 14.75% from the previous month. It is expected that production will increase in July as facilities in Liaoning Kinfa and Shandong Haijiang resume operations.

In terms of costs, due to lower raw material prices, manufacturers' profits increased. In June, profits reached 117.6 yuan per ton, an increase of 83.6 yuan per ton from May. In July, costs are expected to decrease slightly due to weak crude oil and other major raw material prices, leading to a weaker cost support. In terms of demand, June demand remained stable. In July, due to a reduction in home appliance production schedules, demand is in a seasonal low and relatively weak.

Costs

The primary raw materials for ABS materials are butadiene, styrene, and acrylonitrile. In June, butadiene was priced at 0.905 million yuan per ton, styrene at 0.795 million yuan per ton, and acrylonitrile at 0.84 million yuan per ton. For July, styrene prices are projected to range from 0.74 to 0.79 million yuan per ton, acrylonitrile prices from 0.79 to 0.83 million yuan per ton, and butadiene prices are expected to remain weak and fluctuating.

Compared to the previous month, butadiene prices decreased by 4.7%, styrene prices increased by 1.7%, acrylonitrile prices decreased by 2.3%, and crude oil (WTI) prices increased by 10.8%. Price changes were driven by short covering at the beginning of the month, followed by a surge in raw material and crude oil prices in the middle to late month, which increased the demand for short covering. However, the demand ended in the late month and crude oil prices declined. In June, terminal demand was weak, with domestic supply exceeding demand in China. In July, white goods production schedules declined year-on-year. Meanwhile, in July, production capacity utilisation rates at facilities such as Liaoning Kinfa increased, boosting supply. However, this coincided with the off-season for appliance procurement, leading to a decline in appliance production schedules and generally weak terminal demand. It is expected that ABS material costs will decrease in the next period, as the situation in the Middle East eases, with crude oil and raw material prices trending weaker.

Supply

This month's capacity utilisation rate increased from 64.87% to 64.91%, a month-on-month increase of 0.04%. In June, the operating rate of China's ABS industry was 64.91%, an increase of 0.04% from May, which may indicate an increase in industry production activity, potentially driven by market demand or adjustments to corporate production strategies, thereby influencing product supply schedules and market price trends.

Multiple companies adjusted their production facilities. Daqing Petrochemical shut down on March 13 and restarted on April 4. A new 200,000-ton facility began operations by the end of June, resulting in reduced output during these periods. In June, domestic ABS production decreased by 3.16% month-on-month compared to May. From January to June 2025, total ABS production increased by 26.68% year-on-year. Current production capacity stands at 521,000 tons, a decrease of 17,000 tons compared to May, representing a 3.16% decline. From January to June 2025, total production reached 3,222,000 tons, an increase of 678,500 tons compared to the same period last year, representing a 26.68% increase. Due to increased operating rates at facilities such as Liaoning Kinfa and Shandong Haijiang, production is expected to rise in July. This month's operating rate increased by 0.04%, the main reason for which was not specified.

Demand

Demand changes are influenced by various factors. At the beginning of the month, there was short covering, and in the latter half of the month, due to significant increases in raw material and crude oil prices, short covering demand further increased. By the end of the month, short covering demand had subsided, and crude oil prices had declined. In June, terminal demand was weak, with domestic demand in China primarily driven by essential needs. Import volumes are expected to remain largely unchanged. Market transactions were relatively active in the first half of the month, but short-covering demand increased in the latter half. After the short-covering demand subsided, market sentiment became generally lackluster, with manufacturers shipping goods at a moderate pace by month-end and inventory levels accumulating. Overall market demand remained stable. In July, appliance production volumes decreased, and demand entered a seasonal lull. ABS supply exceeded demand, with terminal demand weakening and market demand remaining weak. Meanwhile, the Middle East situation eased, crude oil prices stabilised at low levels, and ABS cost support weakened. Demand is expected to decline in the next period, with a decrease compared to the previous period. However, without specific data, year-on-year changes cannot be determined.

Forecast

Due to the startup of facilities at Liaoning Kinfa and Shandong Haijiang, manufacturers' production and operating rates increased. July production is forecast at 545,000 tons, up from 521,000 tons in June. However, July is a traditional off-season for demand, with market supply exceeding demand and production expectations continuing to rise.

Raw material prices are expected to decline, with styrene prices likely to remain weak; acrylonitrile prices may fluctuate between 7,900 and 8,300 yuan per ton, showing a downward trend compared to previous levels; butadiene prices are unlikely to gain upward momentum and will remain weak and fluctuating. Due to changes in raw material prices and supply-demand dynamics, import prices for styrene, acrylonitrile, and butadiene have declined, leading to overall price decreases. For instance, increased acrylonitrile supply and weakened consumption, coupled with higher butadiene production and ample market supply, have caused price levels to drop.

In July, with weakened cost support, increased supply, and a seasonal slowdown in demand, market prices are likely to decline, with ABS prices expected to remain weak. It is recommended to closely monitor manufacturers' pre-sales, raw material price trends, and petrochemical plant quotes, and maintain a wait-and-see attitude, as market demand is expected to remain weak.

June ABS Market Summary and Outlook

June production reached 521,000 tons, a month-on-month decrease of 3.16%, but the total production from January to June increased by 26.68% year-on-year; finished product inventory rose to 210,000 tons (a month-on-month increase of 14.75%). On the cost side, raw material prices diverged, with manufacturers' profits rising to 117.6 yuan per ton. Terminal demand remained weak, and supply-demand contradictions persisted. In July, the commissioning of new facilities at Liaoning Kinfa and Shandong Haijiang will boost production, but demand is entering a slow season (with reduced appliance production schedules), coupled with weakened support from crude oil and raw material costs, leading to expectations of downward pressure on ABS prices.