Asia ABS prices decline on weak demand; firmer feedstock costs

11 September 2012 09:00  [Source: ICIS news]

SINGAPORE (ICIS)--Asian acrylonitrile-butadiene-styrene (ABS) offers have declined week on week as suppliers are grappling with weakening demand, despite the increase in feedstock prices that has resulted in squeezed margins for resin producers, according to market sources.

“Offers of ABS from major suppliers are down by up to $50/tonne (€39/tonne) at $1,900-1,950/tonne CFR (cost & freight) northeast Asia this week,” said an ABS trader in China.

This was in the face of rising feedstock prices where key raw material styrene monomer (SM) prices went above $1,500/tonne CFR China this week. Other feedstock acrylonitrile (ACN) prices were firm at above $1,900/tonne CFR NE (northeast) Asia for the week ended 7 Sep. Meanwhile, butadiene (BD) prices were also steady at above $1,900/tonne CFR NE Asia.

“With feedstock prices firming, it is quite surprising to see suppliers reducing ABS offers, but then demand is weak,” said a trader in Hong Kong.

There was limited pick-up in demand for ABS in the third quarter despite it being the traditional manufacturing season for exports. The weak US and eurozone economies have curbed demand for Asian finished goods, while the poor performance of Asian economies, including that of China, further reduced the consumption of ABS.

The average operating rates of ABS plants in China were at 55-65% capacity in August and September, way below the usual operating rate of 75-85% capacity seen during the manufacturing season each year.

“Poor exports of finished goods out of Asia this year have reduced demand for resins, including ABS,” said a Taiwanese producer.

Spot ABS prices in Asia bottomed out at around $1,815/tonne CFR NE Asia in early June and trended higher on the back of a rebound in energy futures.

After touching $2,000/tonne CFR NE Asia in July, prices reached an impasse in August as demand failed to pick up significantly. Subsequently, prices came under downward pressure in August as traders started to liquidate stocks in view of the uncertain demand in Asia.

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

($1 = €0.78)

By: Clive Ong
+65 6780 4359

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