26 July 2011 09:02 [Source: ICIS news]
Spot prices rebounded to above $2,200/tonne (€1,540/tonne) CFR (cost & freight) northeast (NE) Asia in the week ended 22 July, up from around $2,060/tonne CFR NE Asia in early July, ICIS data showed.
High energy futures at nearly $100/bbl and the resultant firmer petrochemical prices prompted ABS suppliers to target higher resin prices as their margins are squeezed, but a number of them have conceded that the buying interest of end-users is weak.
However, the price hike initiatives of sellers were derailed by the debt woes in the eurozone and the US. The monetary tightening measures by the Chinese government in a bid to control inflation have also dampened trade in the resin sector, market players said.
Consequently, ABS sellers said they are concerned that the demand for China-made products will decline and dampen consumption of the resin.
“Producers need ABS prices to be at around $2,400/tonne to be in the black, but demand in China is weak due to uncertainties in the US and eurozone,” said a Japanese producer.
As producers were largely making losses in recent weeks, major sellers in China have trimmed their output while others have even shut their plants.
ABS majors such as Zhenjiang Chimei and Ningbo LG Yongxing Chemical have reduced the operating rate at their respective 700,000 tonne/year and 500,000 tonne/year plant to around 50% capacity.
PetroChina subsidiary Jilin Petrochemical restarted its 180,000 tonne/year ABS plant on 17 July after a two-week turnaround and is slowly ramping up the plant’s operating rate, market sources said.
China’s Tianjin Dagu Chemical is keeping its 200,000 tonne/year ABS unit shut while it attempts to start up a new 200,000 tonne/year line.
ABS makers in Taiwan have also reduced their output rate in response to the weak demand and high raw material costs, said market players.
Major producer Chi Mei’s 1m tonne/year unit in Taiwan is operating at around 50%, said market sources.
Formosa Chemical & Fibre Corp’s (FCFC) 360,000 tonne/year unit was said to be shut or operating at below 50% capacity because of the outages at its No 1 and No 2 styrene monomer (SM) plants.
“Despite the lower operating rates of major suppliers and consequently lower inventories in the market, demand is slow and significant price increases have proved difficult,” said a trader in Hong Kong.
ABS is used in office equipment, consumer electronics, toys, automobiles and the construction industry.
($1 = €0.70)
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