17 January 2013 19:50 [Source: ICB]
Acrylonitrile-butadiene-styrene (ABS) is the largest-volume engineering thermoplastic resin. ABS exhibits a wide range of properties, which makes it useful in diverse applications. Electronics is a growing outlet, while the automotive sector is also an important market. Other applications include domestic appliances, construction and recreational goods.
Supply issues include the volatile benzene market, which has put downstream styrene, the major feedstock for ABS, in a precarious position and keept pricing at the forefront of the minds of ABS producers and buyers.
Styrene comprises about 60% of the material, with butadiene (BD) and acrylonitrile (ACN) each at about 20%, but that could change depending on the amount of flexibility needed. More flexibility would necessitate more BD and less ACN in the mix.
In the past year, there have not been any significant supply concerns as producers have been able to meet demand. Drought conditions in the upper Mississippi river area have caused some delays in barge transportation of raw materials to producers in the region, but producers were proactive and worked to ensure supplies were never compromised.
Demand has been relatively good and producers pointed to 2012 as one of the best years for the industry in several years. The automobile industry's growth of 13.4% in 2012 was a significant component of that progress.
The outlook for demand appears to be strong in all segments but construction, which, although not as strong as other ABS sectors, is still showing modest growth and could get better in the years to come.
Supply of imported material from Asia continues to have an impact on the American market, keeping prices in check at times by offering competitively priced material to buyers.
Domestic prices for extrusion high impact grade in bulk ended 2012 at 134-157 cents/lb, after having started 2012 at 135-145 cents/lb.
In 2012, domestic prices for ABS in the US saw three increases during the first half of the year that were related primarily to cost increases and to some extent, improved demand. Those increases amounted to 12-18 cents/lb, which were not quite the amounts that were sought - 14-21 cents/lb.
The price range as 2013 began was wider than it was at the beginning of 2012, and buyers and sellers acknowledged the price range grew broader during 2012.
Four of the five ABS producers in the Americas are pushing price increase initiatives in January and February, citing increasing feedstock costs.
How much of the 4-5 cent/lb increases grabs traction remains to be seen, although it appears that at least 3-4 cents/lb of the increases will become reality.
ABS was patented in 1948 and introduced commercially by US-based BorgWarner in 1954. The three main polymerisation processes used are the emulsion process, suspension process and continuous mass process.
The continuous mass process is considered the preferred route because the reaction does not take place in an aqueous phase. This creates less effluent for disposal and lower energy requirements.
The emulsion polymerisation process, commonly used in plants built before the mid-1980s, provides more flexibility in its product range than the mass process. The batch emulsion is used in the production of high impact grades.
A hybrid emulsion/mass process has also been developed that permits the production of a wide range of ABS products.
The market has evolved into two main sectors - a general purpose sector, where cost and productivity are the most important factors, and an engineering plastics sector, which generates most of the industry's growth.
In the general purpose sector, the building and construction area could see more than moderate growth in 2013 and 2014. ABS is used in the manufacture of extruded pipe and sheet that have several applications in the construction of new homes.
The National Association of Home Builders (NAHB)'s chief economist, David Crowe, believes single-family housing starts will reach 665,000 in 2013 and 865,000 in 2014, after an estimated 528,000 in 2012. In 2015, new housing starts could top 1m.
Global demand for ABS is estimated by industry observers to have grown at about 5-10% in 2012. Some market participants have forecast that ABS demand will increase by 5%/year through 2014.
US exports of ABS in 2012 through November - the latest data available from the US International Trade Commission (ITC) - have totalled 77,364 tonnes, a decrease of 1.0% from the same 11-month period in 2011.
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