07 December 2012 10:31 [Source: ICB]
acrylonitrile-butadiene-styrene (ABS) is an impact-resistant plastic used in the manufacturing of office equipment, consumer electronics, appliances as well as in the automotive and construction sectors.
2012 was a dismal year for the Asian ABS market. The flare up of the eurozone debt crisis and the weak performance in the US economy dampened demand for Asian-made goods. This resulted in a contraction in demand for ABS as the Chinese export sector had a lacklustre year.
The average operating rate of ABS facilities in China was at 60-75% during the third quarter, which is the manufacturing peak season of finished goods for exports. The operating rate was much lower than the more typical level of 75-85% during the peak season each year; which signalled a significant slow-down in exports this year.
In addition Asian economies, including China, also experienced slower growth this year and further reduced demand for resins, including ABS. Demand for ABS waned further in the fourth quarter as end-users kept low stocks after completing most of their production requirements. Traders, similarly kept lean stocks and conducted hand-to-mouth business in view of weak demand.
Spot ABS prices peaked in March at around $2,190/tonne CFR NE Asia and have stayed below $2,000/tonne CFR NE Asia since the first half of May.
Weak demand for Asian-made goods and consequently poor consumption of ABS have weighed on prices through the traditional manufacturing season in the third quarter. From October, prices took another turn down as the market entered a traditional lull season. Prices declined to $1,865/tonne CFR NE Asia in the second half of November.
Asia ABS prices rebounded at the end of November on the back of buoyant feedstock styrene monomer (SM) prices at above $1,600/tonne CFR China. Strong SM prices prompted sellers of ABS to raise offers. Some buyers decided to pick up parcels as they believed prices could have bottomed out. Others continue to wait and see as they have completed production requirements for the year and are in no hurry to accumulate resins.
ABS is made by the polymerisation of styrene with ACN and butadiene (BD). Three main processes are emulsion polymerisation, suspension and continuous mass polymerisation - the last preferred because the reaction does not take place in the aqueous phase, resulting in less effluent disposal and much lower energy needs. Resins with enhanced colour consistency can be produced, making painting unnecessary in certain applications. But, the emulsion route gives more flexibility and is used to produce high-impact grades.
Market players expect the malaise in the market to extend into next year. While some anticipate a potential revival after the Lunar New Year in February, others believe that demand will stay low for the first half of 2013 as global economic conditions continue to remain challenging.
With Asian countries forecasting slower growth in 2013, ABS producers remain cautious with some expecting resin growth to hover around low single percent in 2013. There are only a few expansion plans scheduled so far for 2013, given the weak performance of the market this year. In Asia, South Korea's Cheil Industries has plans to expand its 460,000 tonne/year ABS plant in Yeosu by 90,000 tonnes in March. LG Chem plans to start up a 150,000 tonne/year ABS unit in south China in the second half of next year. Lastly, Jilin Chemical plans to start up a 200,000 tonne/year ABS line in August 2013.
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