US ABS market sees prices down on lower feedstocks, imports

14 March 2013 16:14  [Source: ICIS news]

HOUSTON (ICIS)--US acrylonitrile-butadiene-styrene (ABS) buyers and sellers on Thursday were seeing nothing but downward pressure with two weeks to go until the monthly contract settlement.

Several market participants said that if all factors remain the same, they see the March contract price for general purpose US ABS settling at below $1.30/lb ($2,866/tonne, €2,207). 

One factor pushing US ABS prices lower is falling feedstock prices, market sources said.

ABS is a plastic that is 40-60% styrene, 15-35% acrylonitrile (ACN) and 5-30% butadiene (BD). The most commonly used compositions are made up of 60% styrene, 20% ACN and 20% BD.

The BD March contract settled higher by 8 cents/lb at 84 cents/lb, but high inventories and weak demand are already making BD buyers and sellers rethink that price. Market sources said that if the BD April contract were settled today, it would come in somewhere between 80-82 cents/lb.

US Gulf spot contracts for ACN remained unchanged last week, despite the fact that feedstock propylene dropped by 6 cents/lb. Market sources said the drop in propylene was not enough to cut the price of ACN but that further reductions in that key feedstock, which are expected, may move the ACN price to under $1,900/tonne US FOB. Some market participants were warning of widespread weak demand that resulted in deals in Asia for $1,920/tonne CFR.

The one missing piece of the ABS puzzle, market sources said, is styrene. For the week ended 8 March, spot prices ranged from 74 cents/lb to 76.25 cents/lb US Gulf FOB. One market participant reported spot trades this week ranging from 72 cents/lb to 74 cents/lb. Forecasts earlier in the month had put spot US styrene at about 78 cents/lb.

“If it’s trading even at 74 or 75 [cents/lb], that’s a significant drop from February,” said one trader, who noted the February spot export average was at 77.81 cents/lb. “That’s almost 3 cents/lb lower and surely to have an effect on the price of ABS.”

Other market participants are worried about continuing weakness in Asia, where the ABS spot price is ranging from 85-90 cents/lb. With weak demand in Asia, market sources said they were worried that Asian imports of ABS were putting pressure on US prices.

According to the latest trade data from the US International Trade Commission, US ABS imports for January rose by 14% to 11,325 tonnes from 9,949 tonnes in January 2012. Imports from Korea rose 83%, while Taiwan shipped 25% more product to the US.

“I regularly get quoted prices of $1 [per tonne],” said one market source. “I’ve been buying material from Asia as low as 90 cents [per tonne] delivered.”

Viewed more broadly, several market participants said they were worried about cheap Asian ABS cutting into margins in the one business that’s been consistently strong for US ABS producers - automotive.

($1 = €0.77)

By: Mark Yost
+1 713 525 2653

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