Asia ABS under pressure as traders sell low-priced parcels

20 March 2012 04:12  [Source: ICIS news]

By Clive Ong

SINGAPORE (ICIS)--Asian acrylonitrile-butadiene-styrene (ABS) prices are under downward pressure this week as traders seeking to lock in profits have started to sell low-priced parcels, market source said on Tuesday.

Spot deals were heard at $2,100-2,200/tonne (€1,596-1,672/tonne) CFR (cost and freight) China and Hong Kong, much lower than suppliers’ offers at $2,190-2,270/tonne CFR China and Hong Kong, they said.

“The lower priced parcels are mainly from traders, while producers are mostly holding on to their higher offers,” said a Hong Kong-based trader.

While values of ABS feedstocks butadiene (BD) and styrene (SM) have declined in recent weeks, ABS makers still deem the prices quite high.

BD spot prices fell by about 13% from mid-February to $3,425/tonne in the week ended 16 March. SM prices, on the other hand, stood at an average of $1,467.50/tonne on 19 March, down by 2.2% over the past week, ICIS data showed.

“Margins are still thin with ABS prices and feedstock prices at current levels,” said a Taiwanese producer.

Suppliers in Hong Kong and China, however, anticipate that the lower-priced parcels to be sold out in the near term and allow them to press on with current higher offers.

“Orders for finished products are starting to trickle in and demand for ABS will likely improve in April,” said another dealer in Hong Kong.

Factories in China usually ramp up production of finished goods from April as exports typically picks up from the second quarter.

But economic conditions in Europe and the US – China’s main export destinations – have remained weak. Some ABS players expect this weakness to weigh down on demand for Asian-made products.

“The weak eurozone will continue to dampen exports from Asia and the lack of resolution to the debt crisis will prompt market players to be cautious,” said a Korean distributor.

ABS is used in making toys, consumer electronics, office equipment and has applications in the construction sector.

($1 = €0.76)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

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