FocusAsia ABS may fall until mid-February as sellers offload stocks

24 January 2013 03:14  [Source: ICIS news]

By Clive Ong

ABS is a resin used to make toys, consumer electronics, appliances and is also used in the construction and automotive sectors.SINGAPORE (ICIS)--Spot acrylonitrile-butadiene-styrene (ABS) prices in Asia fell below $2,000/tonne (€1,500/tonne) this week and may remain under pressure as sellers have been lowering their offers to offload cargoes ahead of the Lunar New Year holiday, market sources said on Thursday.

ABS prices had hovered between $2,000-2,050/tonne CFR (cost & freight) NE (northeast) Asia since the start of the year, according to ICIS, until this week as demand waned.

“Users of ABS have sufficient inventories to tide them over the current manufacturing lull season,” said a Hong Kong-based trader.

With buying momentum slowing down, a number of traders were seen trying to liquidate stocks by quoting lower offers.

A number of suppliers expect ABS prices to fall further as traders remained in a selling mode.

“It is difficult for producers to raise prices to achieve adequate margins as buyers have access to cheaper material from traders,” said a producer in southeast Asia.

Traders are still holding stocks of resins that were accumulated at below $1,900/tonne during November and December 2012, market sources said.

“With the Lunar New Year coming up, traders will often reduce stocks for cash,” said another Hong Kong-based trader.

The Lunar New Year, which falls in February this year, is observed for up to two days in most parts of the northeast and southeast Asia. In China, however, the markets will close for the whole week of 9-15 February.

ABS is a resin used to make toys, consumer electronics, appliances and is also used in the construction and automotive sectors.

Producers deem the current ABS prices as unworkable, given the high cost of feedstock for production.

“Margins are virtually zero at prices below $2,000/tonne,” said a producer in Taiwan.

Prices of key feedstock styrene monomer (SM) were hovering below $1,750/tonne CFR China, while those of other feedstocks - acrylonitrile (ACN) and butadiene (BD) - were firm at above $1,800/tonne CFR NE Asia.

($1 = €0.75)

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

By: Clive Ong
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