FocusAsia ABS prices to remain bearish amid weak demand

28 February 2013 03:39  [Source: ICIS news]

By Clive Ong

ABS is used in making office equipment, consumer electronics, toys etc. SINGAPORE (ICIS)--Asia acrylonitrile-butadiene-styrene (ABS) prices - under pressure this week despite elevated offers quoted by key producers – are unlikely to trend up in the first half of the year due to weak demand, market players said on Thursday.

Suppliers have mostly offered resin at $2,070-2,120/tonne (€1,573-1,611/tonne) CFR (cost & freight) China last week but spot prices have slipped to the low of $2,000/tonne CFR China and Hong Kong.

“The actual traded price and the list price could be as wide as $100/tonne at times,” said a resins trader in Hong Kong.

The deadlock in the Italian elections has fuelled concern that the Eurozone debt crisis will escalate and has dampened demand for Asian-made products.

“The Chinese re-export sector remains in the doldrums and sentiment is poor due to concerns over the economies in the Eurozone,” a Taiwan-based ABS producer said.

Some traders expect little improvement in demand for the first half of the year, in contrast to recent optimism that demand could rebound in March.

The possibility of a flare up of the Eurozone crisis has caused market participants to rein in their hopes.

Demand for ABS has been lacklustre since the end of the third quarter last year because of weak consumption of Asian made products from the US and the Eurozone.

Asian economies were also on the downward spiral in the fourth quarter of last year, further reducing demand for end-products and resins, including ABS.

However, ABS prices have been propped up by elevated feedstock prices or else prices would have trended lower amid the weak demand in Asia.

Feedstock butadiene (BD) price hit $2,100/tonne CFR NE Asia in the week ended 15 February, up by $650/tonne from 30 Nov 2012 when BD bottomed out at $1,450/tonne CFR NE Asia.

Similarly, Asia SM prices rose to $1725-1770/tonne CFR NE Asia by 22 February, up from $1630-1700/tonne CFR NE Asia recorded on 7 December, according to ICIS

“Prices would likely be below $2,000/tonne already if feedstock prices did not provide some support,” said another trader in Hong Kong. 

Spot ABS prices rose above $2,050/tonne CFR China right after the Lunar New Year for the week ended 22 February.

However, the uptrend soon reversed as demand did not pick up. Spot prices retreated to the low $2,000s/tonne CFR China this week. 

Buyers are mostly unhurried as they expect further downside potential in prices in the near term.

At the same time, orders for finished goods have not picked up significantly and hence there is no added demand for resins.

“Orders are still weak and users still have some inventories to meet immediate requirements”, said an end-user in southern China.

Cheaper resins are still available and end-users with immediate needs can still purchase resins at a discount from producers’ offer price. 

ABS is a resin used in the manufacturing of toys, appliances, consumer electronics as well as in the automotive and construction sector.

($1 = €0.76)

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

By: Clive Ong
+65 6780 4359

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