Polymers: ABS prices down on weak feedstocks, low demand

24 October 2011 00:00  [Source: ICB]

Playtime is over for ABS producers, as the end-use market stalls Copyright: Nico Kaiser

Asian and European markets see considerable drops as call for finished goods wanes

Acrylonitrile-butadiene-styrene (ABS) prices have plummeted to their lowest levels this year in Asia and similarly fell in Europe as a result of weak demand and ­softening feedstock prices.

Domestic prices in China dropped by yuan (CNY) 500/tonne ($78/tonne) in the week ending September 30, to CNY15,700-16,200/tonne in the week ending October 14, as ­assessed by ICIS.

The Chinese import market also continued to slide.

Prices were at $1,920-1,960/tonne (€1,400-1,429/tonne) CFR (cost & freight) CMP (China Main Port) and CFR Hong Kong in the week ending October 14 - a fall of $60-70/tonne from the week ­ending September 30.

China-based ABS buyers have resisted purchases so few deals were concluded in that week, and the gap between ABS and feedstock prices has led ABS end-­users to expect a further decline in prices.

Many local ABS traders and end-users have said their ­inventories are at a low level, however, there was little interest in purchasing.

Traders also said they were ­inclined to move stocks to lock-in profits, while end-users expect ABS prices to continue falling in the weak market.

One Korean ABS producer said it made almost no deals in the week ending October 7, and considered releasing stocks at about $1,900/tonne CFR CMP. Most import market traders were inclined to move their stocks at lower ­prices - much like their counterparts in the domestic market - in an effort to secure purchases from end-users.

This decline in ABS resins is expected to continue towards the end of the year, as a result of lower feedstock prices and expected weaker demand for ­finished goods in the Asia region.

REDUCED OUTPUT
With ABS demand weak, some small-to-medium ABS converters were reportedly reducing their output or have stopped production completely, in the midst of capital concerns.

Chinese producer Zhenjiang Chimei's 700,000 tonne/year ABS unit is running at a low operating rate of about 60% of capacity, some first-tier distributors said.

The demand for China-made products has been soft, as a result of economic fears in its major export destinations - the US and Europe. With persistent weakness in their respective economies, as well as a mounting debt crisis, these issues have led to a lower consumption of resins. The ­market remains amply supplied, however, even though Chinese ABS plants are operating at about 50% of capacity, one ­Taiwanese producer said.

ABS is a widely used polymer Copyright: RexFeatures

FALLING FEEDSTOCKS
Declining feedstock prices are also responsible for weighing down ABS values.

Butadiene (BD), a major ABS feedstock, fell by approximately CNY2,000/tonne - to CNY19,500/tonne - after the week-long ­Chinese National Day holiday on October 1-7.

Asian styrene monomer (SM) and acrylonitrile (ACN) - the other major feedstocks for ABS - also saw a reduction.

SM prices made a comeback in the week ending October 14, when crude oil futures rebounded to plus $85/bbl.

However, the outlook for SM in Asia remains uncertain, with some market players believing prices may yet further slide downward, reacting to the ­weakened end-user demand and market uncertainty.

Two deals were concluded in the first half of the week at $1,370-1,385/tonne CFR China, LC (letter of credit) 90 days, for ­October arrival.

Mid-week, several December cargoes were sold at $1,325-1,340/tonne CFR China, LC 90 days, as assessed by ICIS. Later in the week prices came off slightly, with an October deal concluded at $1,365/tonne CFR China, LC 90 days.

Looking forward, selling ­indications for November parcels were heard at $1,335-1,345/tonne CFR China, against buying indications of about $1,315/tonne CFR China.

Meanwhile, spot ACN trades were heard concluded at about or below $1,800/tonne CFR Asia - for October shipments to China and India - as suppliers offloaded their ­surplus stocks.

Chinese traders' buying ­indications for shipments in the second half of October, for ­deep-sea material, fell to $1,700-1,750/tonne CFR NE (Northeast) Asia, in line with the weak ­domestic market.

Chinese domestic ACN prices fell to CNY14,100-14,300/tonne ex-works, down CNY600-700/tonne from the end of September, as assessed by ICIS. European ABS prices, in comparison, fell by €50/tonne ($67/tonne) in ­September on average, affected by the drop in feedstock values, weak demand and an influx of cheaper Asian imports.

Prior to this, ABS values rose in August by about €50/tonne, although this was the result of inflated feedstock numbers. Shortly after, in September, various price drops were seen in the range of €20-55/tonne over the course of the month.

Some European buyers said they would look to push through further decreases in October, as demand remains weak.

In addition, feedstock prices in Europe are expected to continue to fall.

BD prices for October were ­assessed down €300/tonne on the September figures, with one customer warning that prices could fall by three figures.

European ABS contracts began to settle down by about €70-90/tonne, and drops on either side of this range have also been heard in the market.

One extrusion buyer said it has settled all of its October contracts for decreases of €70/tonne, €80/tonne and €100/tonne depending on the producer.

Additional reporting by Helen Yan in Singapore and Amandeep Parmar in London

Author: Feliza Mirasol and

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