FocusAsia ABS to stay weak throughout February on sluggish demand

08 February 2013 06:12  [Source: ICIS news]

By Clive Ong

ABS is used in the manufacture of toys, appliances, consumer electronics. It also has applications in the automotive and construction sectors. SINGAPORE (ICIS)--Asia’s acrylonitrile-butadiene-styrene (ABS) trades may remain lacklustre for the rest of the month because of weak demand, and with the key China market closed for a whole week for the Lunar New Year holiday, industry sources said on Friday.

Traders expect limited upside for resin prices in the near term, notwithstanding high feedstock costs, as downstream plants are running at reduced capacity.

“Margins are negative but resin prices are depressed by feeble demand,” said a producer in southeast Asia.

Spot ABS prices continued to languish in the low-$2,000/tonne (€1,500/tonne) CFR (cost & freight) NE (northeast) Asia levels, according to ICIS, as market activities have winded down ahead of the Lunar New Year holiday.

The Chinese markets will be closed on 9-15 February. The Lunar New Year is also celebrated in other countries in northeast and southeast Asia for two days at most.

While there is a general expectation that buying momentum would pick up in the second half of February, when Chinese market players come back after their week-long Lunar New Year holiday, this may not be enough to buoy up ABS prices.

“We might have to wait until March before the market revives in earnest as factories usually ramp up output in April,” said a Hong Kong-based trader.

ABS producers are suffering from squeezed margins as prices of feedstocks styrene monomer (SM), acrylonitrile (ACN) and butadiene (BD) have remained firm.

SM were at above $1,750/tonne CFR China this week, ACN and BD were hovering near $2,000/tonne CFR NE Asia.

At current cost of feedstocks, ABS producers said they can only break-even if their products are priced at least higher than $2,100/tonne CFR NE Asia.

Major ABS suppliers attempted to hike ABS offers in late January to $2,100/tonne CFR NE Asia but there was not much buying interest, market sources said.

Offers have subsequently drifted lower to $2,030-2,050/tonne CFR NE Asia, but buyers have kept to the sidelines.

“Lower prices are unlikely to entice buyers at this point due to the holidays, so sellers will likely hold this price level in the near term,” said another trader based in Hong Kong.

ABS is used in the manufacture of toys, appliances, consumer electronics. It also has applications in the automotive and construction sectors.

($1 = €0.75)

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

By: Clive Ong
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