Downstream demand in the ABS market is ineffective

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China Drying Network News: "The current ABS market is experiencing a sluggish supply of goods, coupled with the worrisome economic situation at home and abroad, seriously dampening the enthusiasm of traders to enter the market. Although there is a positive support for raw materials, there is a limited amount of energy, and businesses hope for 'Jinji' or "The bubble." Jilin Yuanshun chemical trading company Wang Junlong told reporters.

Due to sufficient supply, weakening the upward momentum, in order to avoid cost inversion, ABS manufacturers have taken more measures to cut operating rates and reduced market supply. However, this effect was not satisfactory. A staff member of the Northeast Sales Company stated that this self-rescue method of ABS manufacturers has suppressed the market downtrend to a certain extent, but it has not injected too much interest into the market. If you want to reverse, you need the cooperation of downstream demand.

It is understood that the current average operating rate of ABS manufacturers is less than 70%, and the daily output is only about 3800 tons. The second batch of equipment maintenance (4 lines) was completed on August 14th by Ningbo LG Yuxing, and the operating rate was maintained at around 60%. Taiwan Chi Mei has lowered the operating rate of an ABS device to 70%; the plan to increase the annual production capacity of the device to 150,000 tons at the Zhenjiang plant in July has also been postponed due to the sluggish market. Liao Tong Chemical (Panjin Ethylene) ABS all equipment shutdown maintenance.

“It is reported that Ningbo Taihua’s new 150,000-ton plant will be put into operation in September, which is undoubtedly a negative factor for the current market, or further weakening the ABS upside momentum.” The sales company staff introduced.

The persistently low demand is the root cause of the difficulty in strengthening the ABS market. Judging from the current situation, regardless of raw material ABS or downstream household appliances, automobiles and other products, “Jinjiuyinshi” may not arrive on time and it is expected that it will fail.

The first is the home appliance industry. The country's ongoing housing market regulation policy has a greater impact on home appliance sales. In accordance with past practice, "Jinjiuyinshi" is a time when merchants sell big. However, according to the manager of the Goomei Jilin Branch Store, the current sales volume of home appliances is not satisfactory. The withdrawal of home appliances to the countryside, home appliances replacement, energy saving and people-friendly projects and other national policies resulted in the loss of external sales of product sales. The new energy-saving products compensation policy, because of the higher product prices, did not bring sales boom.

At the same time, the e-commerce price war known as "the most tragic in history" has started. However, household appliances are durable consumer goods, and they are also products that are faster to replace. Few consumers or businesses will stock up on home appliances. Sales are basically still from demand, and the current situation of insufficient demand is hard to bring about a turnaround through discounts. Therefore, the e-commerce price war will not have a significant stimulus to the sales of home appliances.

On the whole, the market's various actions are difficult to meet the weak domestic and international demand. This bearishness has occupied a larger proportion of the market.

Current car sales are mainly focused on destocking. Faced with high inventory of dealers, manufacturers introduced some of the incentives or subsidies to adjust the measures, but dealers still feel a glass of water.

"In the first half of this year, the China Automobile Dealers Association conducted a sample survey of more than a thousand 4S stores of top 100 dealership groups, showing that dealers’ inventory has continued to increase, and most of them have far exceeded the warning line; the Ministry of Finance announced that the vehicle purchase tax for June was 16.3 billion yuan, a decrease of 100 million yuan compared with the same period of last year. These data show that relying on the auto market to achieve the bailout is unlikely for ABS.” Wang Junlong analyzed.

At present, the international and domestic situation facing China's economic and social development is still severe. Internationally, the deep-seated impact of the financial crisis continues to show. The world economy is recovering by a series of twists and turns, and fragile market confidence is less likely to recover. The global economic growth downturn may continue for a long time. Domestically, the foundation for China’s economic stabilization is not yet stable. Many constraints are faced in the expansion of effective demand. The difficulty in production and operation of enterprises has increased. The task of structural adjustment is arduous, and the downward pressure on the economy remains high.

In the event of sluggish demand, the raw material prices are firm and it is a rare advantage for the ABS market. Styrene showed a steady rising trend, crude oil continued to rise outside the disk, in some areas continued decline in market inventories, merchants mentality boosted, styrene prices once again returned to 10,800 yuan / ton high. The short-term domestic styrene market is still more optimistic and there is still room for growth. The overall export of the manufacturers is still limited, and there are not many imported goods to Hong Kong. The sellers are reluctant to sell, and the sentiment is obviously rising. The offer is biased towards high levels and the low-price negotiations are reduced, forming support for the ABS market. Especially in the international crude oil continues to rise, the downstream rubber market tends to stabilize and other good effects, or will rebound.

However, this favorable factor is far from the direction of the market. The ABS market is bearish, and in the absence of substantial changes in downstream demand, September may continue to be weak. “Jin 9 Silver Ten” will be lost.

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