ABS and SAN Markets Show a Firmer Tone
17 June 2002 00:00 [Source: ICB Americas]
The markets for acrylonitrile
(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
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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