FocusEuropean ABS producers targeting Jan contract price increases

14 January 2013 17:29  [Source: ICIS news]

LONDON (ICIS)--European acrylonitrile-butadiene-styrene (ABS) producers are looking to raise prices for January contract business following an increase in the feedstock styrene January contract price.

ABS producers are understood to be looking to increase January contract prices across all grades by €30-60/tonne ($40-80/tonne) on the back of a €60/tonne rise in the January feedstock styrene contract. January contract price negotiations are still ongoing.

One producer has offered a rollover to some of its larger volume customers.

Styron, a major producer of ABS, announced on 20 December that it would initially target a January contract price increase of €100/tonne, but has revised this figure down to €60/tonne following the January styrene settlement. The fact that January ABS demand has not taken off was also a factor.

Another major producer is looking to increase prices by €50/tonne, as lower-than-expected demand, and pressure from cheaper Asian-produced ABS available to European buyers, have put pressure on suppliers to keep increases to a minimum.

Demand levels for the first quarter of 2013 have already started to deviate away from those of last year, market participants said. 

“Last year Q1 [first quarter] everyone was convinced prices would go up, and they did. This year, they are not,” a major ABS producer said.

January 2012 saw a flurry of buying activity as consumers replenished depleted year-end stocks ahead of price hikes throughout the first quarter.

“Last year [demand] really had a boom in Q1, which isn't there this year. [Demand today is] roughly at the level of Q3 [third quarter 2012]. There's not a lot of incentive to do pre-buying as per last year,” the producer added.

Consumers did not rush to lower inventory levels at the end of 2012 as it became evident December prices would roll over. Subsequently, the New Year has started with a lot of buyers in no desperate hurry to start buying product.

“People are sitting on their stock, selling it at a premium and not rushing to replenish” a UK-based compounder and distributor of ABS said.

Despite slightly lower purchasing activity compared to last year, market sentiment is one of cautious optimism. Both suppliers and consumers are reporting that demand levels for January have been satisfactory so far.

“Demand is good enough. Order entry is still good, customers had low stocks and need to replenish,” a buyer and compounder of ABS said.

Players are already looking ahead to February and March, and indications of raw material costs for the rest of the first quarter.

“[It is] still not 100% clear how the market situation is going to continue. The impression [is] that customers are waiting for more information for the coming months”, a producer said.

The European styrene barge contract price for January settled at €1,488/tonne, an increase of €60/tonne from the previous month. The contract price was agreed on a free on board (FOB) Amsterdam-Rotterdam-Antwerp (ARA) basis.

December ABS prices were €2,165-2,205/tonne free delivered (FD) northwest Europe (NWE) for compounding grade, €2,255-2,310/tonne FD NWE for injection moulding (natural) and €2,180-2,310/tonne FD NWE for extrusion grade (natural), according to ICIS.

ABS is used in the automotive and household goods sectors.

($1 = €0.75)

By: Matt Tudball
+44 208 652 3214

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