Asia ABS demand may pick up as premium over HIPS thins down

09 November 2012 11:34  [Source: ICB]

Demand for acrylonitrile-butadiene-styrene (ABS) in Asia may improve following a major weakening of its price spread over a competing product high impact polystyrene (HIPS), market sources say.

Lacklustre demand for ABS, which usually commands a premium of $200-300/tonne (€154-231/tonne) to HIPS given its stronger resistance, saw the price gap narrowing since August, they said.

"The usual spread between ABS and PS is less than $100/tonne currently, and maybe prices of the resins could reach parity soon," said a China-based ABS trader.

In late October, ABS prices were assessed unchanged at $1,920-1,960/tonne CFR (cost and freight) NE (northeast) Asia, while HIPS was at $1,840-1,860/tonne CFR China, according to ICIS.

ABS IMPACT STRENGTH

"Perhaps more HIPS users will start to switch to ABS since it has higher impact strength," said a Hong Kong-based trader.

The ABS-HIPS price spread has been narrowing since mid-August, when it fell below $200/tonne from the peak of $390/tonne on 17 February, according to ICIS.

Asia ABSA number of traders expect ABS makers to try raising prices, but it would be difficult given the current lull season and declining values of main feedstocks acrylonitrile (ACN) and butadiene (BD).

"ABS demand is very weak this year as the Chinese exports sector was sluggish," another Hong Kong-based trader said. Weak economic conditions in the US and the eurozone have curbed demand for Asian-made goods.

ABS - which is made up of 25% ACN, 15% BD and 60% styrene monomer (SM) - is used to make toys, appliances, consumer electronics and office equipment.

Falling prices of feedstocks ACN and BD compound the pressure for ABS. BD fell to $1,775/tonne in late October, from around $2,450/tonne CFR NE Asia in mid-July. ACN, on the other hand, shed $200/tonne from mid-September to $1,750/tonne in late October because of poor demand, ICIS data show.

"The weak performance in ACN and BD prices since late September has caused ABS prices to stagnate," said an ABS producer.

HIPS, on the other hand, is being buoyed up by firm values of feedstock SM as the product has a higher 90% content of the monomer compared with ABS.

SM prices have gained more than $300/tonne from early June to $1,625/tonne CFR China on 19 October because of strained availability of spot cargoes in Asia, according to ICIS.


By: Clive Ong
+65 6780 4359



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