FocusAsia ABS at 13-year high of $1,800/t

14 April 2008 05:27  [Source: ICIS news]

By Clive Ong

SINGAPORE (ICIS news)--Acrylonitrile-butadiene-styrene (ABS) prices have hit a 13-year high, with prices breaching the $1,800/tonne mark, driven by cost pressures from rising feedstock acrylonitrile (ACN) and styrene monomer (SM) values, producers said.

The current levels, which were on a CFR (cost and freight) Asia basis, have not been seen over a 13-year period, according to data from global chemical market intelligence service ICIS pricing.

While some suppliers were even targeting $1,900/tonne CFR China and above, in a bid to improve margins, some sellers believed this rally in prices was not expected to continue for long.

Slow demand in China could make the higher figures hard to achieve, most sellers said.

Both SM and ACN spot values have increased by more than $100/tonne since December 2007, bolstered by buoyant crude and naphtha values.

“Rising raw material costs have squeezed our margins and we have to raise prices in tandem,” said a Taiwanese producer. “Indeed, current spot trades of $1,800-1,840/tonne CFR China were barely sufficient to cover our production costs.”

Spot SM values rose to $1,430-1,450/tonne CFR China in April from below $1,300/tonne CFR China in December 2007 while ACN numbers jumped to $1,950/tonne CFR northeast (NE) Asia in April from around $1,850/tonne CFR NE Asia in December 2007, on tight supply.

Meanwhile, butadiene (BD), which comprises of around 15% in ABS manufacturing, rebounded from its recent low of $1,650/tonne CFR NE Asia to $1,800/tonne CFR NE Asia in April.

Though demand for the resins was slow at present, it was expected to recover after the Chinese Labour Day holidays, some sellers said.

However, traders believed that US recession fears could hamper this recovery as it had limited the orders filtering through to Asian moulders.

“A significant pick up in demand might only materialise in July and last till September,’ said a Hong Kong trader.

Also, the tightening of credit by the Chinese government, combined with the power and labour shortage in the southern regions had also dampened production output at factories.

High resin prices also meant that moulders would substitute ABS with cheaper resins or recycled material.

This could also lead to slower consumption of ABS and hence the higher prices targeted by suppliers might not be achieved, said another trader based in Hong Kong.

Major NE Asia ABS manufacturers include Chimei Corp, Formosa Fibre and Chemicals Corp, LG Chem and Cheil Samsung Corp.

By: Clive Ong
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