ABS and SAN Markets Show a Firmer Tone

17 June 2002 00:00  [Source: ICB Americas]

The markets for acrylonitrile-butadiene-styrene (ABS) and styrene acrylonitrile (SAN) have been very strong over the past few months. Fundamental demand has picked up as the economy has rebounded from its slowdown in 2001, and customers are rebuilding inventories that ran down at the end of 2001.

"ABS is very strong right now," notes a spokesman for GE Plastics. "We are selling everything we can make." He credits the market's recovery to a pickup in the downstream automotive and building and construction markets.

David Gingras, head of styrenics product management at Bayer Plastics, concurs that the ABS market has picked up over the past few months. He says demand for ABS has risen because of lower customer inventory levels and greater purchases of recreational equipment such as boats, vehicles and aftermarket parts. "In addition, first quarter 2002 residential construction and major appliance/refrigeration builds have increased 3.4 and 14 percent, respectively, versus first quarter 2001," he says. "These economic indicators also help explain some of the increase in demand we've seen for ABS."

North America is coming out of last year's economic slowdown more quickly than Europe and Asia, and Mr. Gingras cites economic health as the key to a recovery for ABS. "The better the economy, the better our business," he says. "Since consumer confidence has increased compared to this time last year, more people are willing to spend discretionary funds for products like recreational vehicles, spas and boats."

Traditionally, the second and third quarters are the strongest part of the year for ABS because many of the consumer products that use the polymer are seasonal. Mr. Gingras says the industry hopes to get back to growth rates of 2 to 3 percent per year. "We have many new applications in the works that will provide long-term growth," he says. "Magicore technology [multilayered ABS and a weatherable polymer system] is making continued inroads in the recreational vehicle market. We are also working on other applications in bus, truck and marine products."

GE Plastics rates the global ABS market at around 12 billion pounds and says it is growing at an average rate of 3 to 5 percent per year. The company says the market has evolved into general purpose ABS, for which cost and productivity are the most important factors, and higher-end, engineered products, which are generating most of the industry's growth. "Customers are demanding more from suppliers," GE Plastics says. "They are holding less inventory, so they demand a higher level of service from their suppliers. They want instant access to information and the ability to turn orders around with little lead time."

Feedstock costs remain a concern for the ABS industry as the benzene-styrene chain has moved up considerably since the start of the year. ABS producers decline to comment on pricing beyond saying that it is customer-specific and varies according to volumes and contract terms. BASF AG is raising its European prices for Luran SAN copolymer and Terluran and Ronfalin ABS copolymers by  200 ($175). Bulk domestic pricing for medium-impact ABS is roughly in a range of 69 to 75 cents per pound. Bulk high-impact ABS is about 73 to 78 cents.

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