September 06, 2024 – As September dawned, the crude oil market unexpectedly plunged, sparking shockwaves among industry insiders who had anticipated a vibrant “golden September” only to find themselves confronted with a “startling September” instead. Amidst this pervasive pessimism, however, the ABS market remained an island of calm, unswayed by the broader market turmoil.
The resurgence of Libyan crude oil supply expectations served as the catalyst for the international oil market’s sudden downturn. According to JLC (Joint Logistics Consultants) data, on September 3rd, optimism surrounding a resolution to the dispute over control of Libya’s central bank significantly eased tensions in the oil market, leading to a steep decline of 3.21inthepriceofOctober−deliveredlightcrudeoilfuturesontheNewYorkMercantileExchange,closingat70.34 per barrel and marking a significant 4.36% drop. This decline not only erased gains made throughout the year but also set a new low since December 12th, 2023. By the close of trading on September 4th, prices had breached the crucial $70 per barrel threshold.
The ripple effects of this crude oil rout swiftly reached downstream markets, with styrene prices following suit. Reflecting the broader market weakness, styrene prices weakened further as commodity futures generally declined. Following a downward trend during the September 3rd night session, EB futures continued to open lower under pressure early on September 4th. Despite significant destocking at East China terminals, market fatigue persisted. On September 4th, East China styrene closed at RMB 9,380-9,390 per ton, marking a decline of RMB 180 per ton from the previous trading day.
In contrast to the downward spiral of crude oil and styrene, the ABS market exhibited remarkable composure. According to the Color Masterbatch Industry Network, this stability stems from ABS manufacturers’ cautious stance towards the latest price fluctuations, which have been frequent and unpredictable. Moreover, some newly commissioned facilities encountered operational setbacks, delaying the timely release of quality products into the market. Concurrently, certain maintenance-related restarts operated at low capacities or experienced slight delays, contributing to a tenuous balance between supply and demand within the ABS industry.
Looking ahead, whether the anticipated “golden September” for the ABS market will indeed transform into a “startling September” hinges on several critical factors. Close monitoring of real-time developments in the crude oil and styrene markets, as well as the commissioning progress of new ABS facilities, will be essential in gauging the market’s future trajectory. Assuming these variables remain largely unchanged, the ABS market may persist in its current state of stalemate.