Asia ABS retreats on weak demand, feedstocks

16 September 2008 05:52  [Source: ICIS news]

SINGAPORE (ICIS news)--Asian acrylonitrile-butadiene-styrene (ABS) resin remained on a downtrend this week with spot prices slipping to the low-$2,000s/tonne (€1,400/tonne), amid persistently weak demand in the key Chinese market, traders said on Tuesday.

Spot prices were around $2,200/tonne CFR (cost and freight) China in the first half of July.

The financial woes in the US and Europe had curtailed orders for finished goods flowing into China. Factories reported limited orders with expectations of even slower demand in the fourth quarter.

"With the recent troubles at US financial institutions, US demand for Chinese goods will surely decline," said a trader in Hong Kong.

The Chinese government had recently reduced the key one-year lending rate and the reserve ratio at banks, in a move to ease the tight credit environment.

With the US and European economies decelerating, the Chinese government aimed to coax its own economy to grow at high single digits.

However, these measures appeared to have limited impact so far while market players believed the effect would be felt only in subsequent months.

"The easing of credit in China would filter to the broader economy only in the second half of next year; the economy will weaken this year," said a trader in southern China.

The anticipation of a slow down in the US and Europe also sent crude prices falling below $95/bbl this week, compared to the all time high set in the first half of July at $147/bbl.

As a result, feedstock styrene monomer (SM) and acrylonitrile (ACN) values also lost ground over the past several weeks.

"Weak demand and declining feedstock will soon push ABS prices below $2,000/tonne," said another trader in Hong Kong.  

($1 = €0.70)

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By: Clive Ong
+65 6780 4359

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