FocusAsian ABS retreats from highs of $2,000/t as buying abates

18 July 2012 04:21  [Source: ICIS news]

By Clive Ong

SINGAPORE (ICIS)--Spot acrylonitrile-butadiene-styrene (ABS) prices in Asia eased below $2,000/tonne (€1,620/tonne) this week - after trading as high as $2,030/tonne - as a result of weakening of buying interest, traders and producers said on Wednesday.

However, some traders said they believe that with crude futures performing well this week ABS prices could have further upside potential after this consolidation.

“Buying momentum has abated after end-users stocked up parcels last week,” a trader in Hong Kong said.  

The surge in feedstock styrene monomer (SM) and butadiene (BD) prices over the past two weeks had lifted ABS prices.

SM prices reached $1,400/tonne CFR (cost & freight) China this week, up from $1,240/tonne CFR China in the first half of June, while BD prices surged to $2,400-2,500/tonne CFR NE (northeast) Asia in the week ended 13 July, up by more than 30% or $600/tonne since mid-June.

Buyers had also emerged from the sidelines in the first half of July to pick up resins, in order to replenish inventories as well as on fears that prices will continue to escalate.

ABS Prices had touched a low for the year of $1,815/tonne CFR NE Asia in late May.

The high point for the year was in the first half of March where prices reached $2,190/tonne CFR NE Asia, according to ICIS data.

“Trades this week are mostly in the mid-to-high $1,900s/tonne, a tad lower than last week,” said a Taiwan-based producer.

However, for those who believe there is potential of ABS prices to rise again cite the third quarter manufacturing season for exports in China has already kicked off and factories are expected to crank up operating rates.

This should lead to higher resins demand, some traders said.

On the other hand despite the arrival of the peak season, ABS makers generally expect overall demand to be softer than last year given the current weak global economic situation.

“The US and Chinese economies are slowing and that should hit demand for Asian resins unless there is additional stimulus by the government,” said a second Taiwan-based resins producer.

The average ABS operating rate in China was at 70-75% in July, up from 65% in June as demand in the mainland showed modest improvement.

ABS is a resin used in the manufacturing of office equipment, consumer electronics, toys as well as in the automotive and construction sector.

($1 = €0.81)

By: Clive Ong
+65 6780 4359

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