Asian ABS prices under downward pressure from falling BD costs

30 April 2012 04:33  [Source: ICIS news]

Asian ABS prices under downward pressure from falling BD costsSINGAPORE (ICIS)--Buying indications for acrylonitrile-butadiene-styrene (ABS) resins declined to below $2,000/tonne (€1,520/tonne) on 30 April in Asia amid the sharp fall in feedstock butadiene (BD) prices for the week ended 27 April, said traders in Hong Kong on Monday.

Discussions of spot BD prices at around $2,500/tonne CFR (cost & freight) NE (northeast) Asia depressed sentiment among ABS market players. BD prices had peaked at around $3,950/tonne CFR NE Asia in the first half of February 2012.

“Bids for spot ABS parcels are in the high $1,900s/tonne CFR Hong Kong today,” said a resins trader.

Offers from major suppliers remain largely unchanged from last week at $2,030-2,090/tonne CFR Hong Kong but buyers are seeking lower prices.

However, with margins in negative territory, ABS producers have limited appetite for lower offers. ABS producers in China have scaled down operating rates at their plants to an average of around 60% in April as they face rising inventories, low margins and lacklustre demand.

There is a cautious optimism among ABS suppliers that demand in China may rebound towards the middle of the year as factories stock up resins ahead of the third quarter when manufacturing for exports traditionally takes place every year.

“Buyers should be returning to the market from after the May Day holidays as they have to build up stocks in preparation for higher production season,” said a Taiwanese producer.

However, with the weak economic conditions in the US and the eurozone, as well as lower GDP expectations in China, it remains far from certain that a rebound in production activities will be significant.

“Everyone hopes that demand will improve by the end of the second quarter but it remains to be seen,” said another trader in Hong Kong.

ABS is used to make office equipment, consumer electronics and toys, as well as in the automotive and construction industries.

($1 = €0.76)

By: Clive Ong
+65 6780 4359

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