Asia ABS hits parity with HIPS at about $1,850/t on weak demand

19 November 2012 06:26  [Source: ICIS news]

By Clive Ong

PS is used for packaging, toys, appliances, consumer electronics, while ABS is used for toys, office equipment, appliances, consumer electronics, as well as in the automotive and construction sectors.SINGAPORE (ICIS)--Asia acrylonitrile-butadiene-styrene (ABS) values continued to weaken this week, with price quotes for the resins now at the same levels as those for rival product, high impact polystyrene (HIPS), market sources said on Monday.

Initial expectations that the narrowing of price gap between the two products will lead to better demand for ABS failed to materialise, as general demand for resins has remained poor, they said.

”Some ABS resins are selling as low as $1,850/tonne (€1,443/tonne) in China, which is about the same prices as some HIPS resins,” said a trader in China.

On 16 November, ABS prices were assessed at $1,860-1,920/tonne CFR (cost and freight) NE (northeast) Asia, while HIPS was at $1,820-1,850 CFR China, according to ICIS.

The weak performance of the region’s ABS sector this year has largely been attributed to the economic malaise in the US and the eurozone that led to a significant decline in demand for Asian finished goods.

The consequent slowing down of Asian economies, including China, further reduced consumption of resins like ABS.

“ABS usually leads HIPS by $250-300/tonne but now that spread is gone, as ABS has performed worse than HIPS, pricewise,” said a Korean resin distributor.

Another reason for the relatively weaker prices of ABS over HIPS was poor feedstock prices.

Prices of acrylonitrile (ACN) and butadiene (BD), which make up around 40% of ABS, were performing poorly over the past several months.

ACN values have slipped to $1,700/tonne CFR NE Asia this month, from around $1,900/tonne CFR NE Asia in the first half of September.

BD prices, on the other hand, declined to $1,665/tonne CFR NE Asia from $2,000/tonne CFR NE Asia over the same period, ICIS data showed.

For HIPS, on the other hand, prices of the key feedstock – styrene monomer (SM) – have been on the uptrend and are now hovering in the high-$1,500/tonne CFR China levels, up from the low $1,500/tonne CFR China levels in September.

“The buoyant SM prices have kept PS prices firm, while weak ACN and BD values have weighed down ABS prices,” said a Taiwanese resin producer.

While some players anticipated that PS end-users could switch over to using ABS, since the price difference has narrowed significantly in recent weeks, this has largely not taken place as demand for resins remained lacklustre.

“The market is in a lull period now and demand for both PS and ABS is weak, so there is no buying impetus among end-users,” said a southeast Asian resin producer.

PS is used for packaging, toys, appliances, consumer electronics, while ABS is used for toys, office equipment, appliances, consumer electronics, as well as in the automotive and construction sectors.

($1 = €0.78)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections


By: Clive Ong
+65 6780 4359



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