Asia ABS offers rise $50/tonne on buoyant feedstock prices

01 February 2012 05:26  [Source: ICIS news]

SINGAPORE (ICIS)--Offers for Asian acrylonitrile-butadiene-styrene (ABS) prices increased by as much as $50/tonne this week on the back of buoyant feedstock prices and as participants in China streamed back into the market, traders said on Wednesday.

Spot ABS prices are being quoted at $2,100/tonne (€1,596/tonne) CFR (cost & freight) China, as values of feedstock butadiene (BD) surged to $3,500/tonne CFR NE (northeast), they said.

BD prices were at the low $3,000/tonne CFR NE Asia levels in the week ending 21 January, before the Lunar New Year holiday, according to ICIS data.

Prices of styrene monomer (SM) – another ABS – held steady at above $1,400/tonne CFR China, the data showed.

Several ABS suppliers have been raising prices in a bid to improve margins.

”With feedstock prices on the increase, our production costs are rising all the time, so higher ABS offers are inevitable,” said a Taiwanese producer.

While resin offers have increased this week, end-user demand has not fully picked up.

“The market will fully resume next week, so it will be clearer then if demand is strong or not,” said a Hong Kong-based ABS trader.

While inventories among end-users are not high, buying momentum might still stay weak as the Chinese export sector is expected to be dampened by the ongoing debt crisis in the eurozone and the weak economic conditions in the US.

Furthermore, end-users have secured production contracts for finished products based on lower ABS pricing in November and December.

A number of them are engaged in negotiations with clients to raise prices of end-products, given the surge in ABS values in recent weeks.

“The sharp increase in ABS prices in December and January amid the seasonal lull has caught many end-users by surprise,” said another trader in Hong Kong.

Current ABS quotes represent about a 17% increase from levels in the second half of November 2011, according to ICIS data.

But end-users on the whole are still expected to replenish some ABS stocks in February and March, in preparation for higher production season in April.

ABS is used in the manufacture of office equipment, consumer electronics, toys, automotives as well as in the construction industry.

Major ABS producers include Chimei Corp, Formosa Chemical and Fibres Corp, LG Chem, Cheil Samsung, Kumho Petrochemicals and Toray Industries.

($1 = €0.76)

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By: Clive Ong
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