The Asian ABS market has mostly tended to slide since around mid-September if not for occasional price spikes. A combination of bearish factors including increased supply, low season, and falling spot styrene prices maintained the downward momentum in the fourth quarter of 2021.

Imported ABS has a slightly higher price than the lowest level in the past year

According to weekly average data from ChemOrbis Price Index, the overall price range of imported ABS in China and Southeast Asia has hit its lowest level since early November 2020. The cumulative decline has reached around 300-320 USD/ton since mid-September.

Domestic ABS in China hits year-to-date low

Meanwhile, the weekly average local price of ABS is currently hitting its lowest level this year after falling a total of $380/ton since mid-September. Selling pressure has increased due to ample supply in China. , because factories restart after maintenance.

ABS is not supported from the upstream side

Upstream costs cannot provide a source of support for the ABS market. CFR China spot butadiene prices fell $110/mt this week to $630/mt, the lowest since late August 2020. ChemOrbis Price Tool shows prices $930/ton lower than with a peak in early August.

The Chinese CFR spot ACN price fell relatively smaller and fell slightly below $2150/ton.

Styrene signals stabilizing momentum, forward curve still tends to offset and delay selling

For styrene, spot prices fell sharply in November due to increased supply due to factory start-ups in China.

Meanwhile, a rally in crude oil futures prices pulled styrene off its bottom about a month ago. Data from ChemOrbis Price Instruments showed spot styrene prices were mostly flat last week.

Although prices have signaled stability on the back of an uptrend in oil futures and buying short, a series of new capacity additions in China have dampened the futures price outlook.

Besides, about 58% styrene, 25% acrylonitrile and 18% butadiene are used in the production of ABS.

Downstream demand is not high due to low season

Declining demand for home appliances due to low season is a major pressure. Downstream production in China continues to stagnate as many factories operate at lower capacity because of the country's ongoing power supply crisis. Meanwhile, in Southeast Asia, demand has been hit by Covid-related lockdowns.

The year-end lull and demand concerns due to the Omicron variant also affected buying sentiment and made trading cautious in December.

Market activity weaker than expected before Lunar New Year

Despite the seasonal patterns, pre-holiday purchases have not picked up this year due to reports of a drop in orders. In fact, market participants are contemplating leaving their desks earlier than usual for the Lunar New Year holiday to fall on February 1, 2022.

Lower operating capacity and weakening demand counterbalance each other

Government plans to reduce air pollution ahead of the Winter Olympic Games to be held in Beijing have reduced operating capacity. Some sources expect the output slump to counterbalance weak downstream activity in the run-up to the Lunar New Year.