27 July 2012 00:00 [Source: ICB]
Spot acrylonitrile-butadiene-styrene (ABS) prices in Asia eased below $2,000/tonne (€1,620/tonne) in the week ended July 20 - after trading as high as $2,030/tonne - as a result of weakening buying interest.
However, some traders believe that with crude oil prices rising, 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 previous two weeks had lifted ABS prices.
SM prices reached $1,400/tonne CFR (cost & freight) China in the week ended July 20, up from $1,240/tonne CFR China in the first half of June. BD prices surged to $2,400-2,500/tonne CFR NE (Northeast) Asia in the week ended July 13, up by more than 30% or $600/tonne since mid-June.
Buyers also emerged from the sidelines in the first half of July, in order to replenish inventories as well as on fears that prices will continue to escalate.
LOWS AND HIGHS
ABS had touched a low for the year of $1,815/tonne CFR NE Asia in late May. The high point was in the first half of March where prices reached $2,190/tonne CFR NE Asia, as assessed by ICIS.
"Trades this week are mostly in the mid- to high $1,900s/tonne, a tad lower than last week," said a Taiwan-based producer in the week ended July 20.
However, those who believe there is potential for ABS prices to rise again, cite the third-quarter manufacturing season for exports in China which has already kicked off. 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.
"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.
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