Price and market trends: US ABS prices face downward pressure

22 March 2013 09:15  [Source: ICB]

US acrylonitrile-butadiene-styrene (ABS) buyers and sellers on 14 March were seeing nothing but downward pressure with two weeks to go until the monthly contract settlement.

US ABS

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.

BUTADIENE RETHINK

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 the week ended 8 March, despite the fact that feedstock propylene dropped by 6 cents/lb. Sources said the drop in propylene was not enough to cut the price of ACN but that further reductions, 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 the week ended 15 March 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 at 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.

RISE IN IMPORTS

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."


Author: Mark Yost



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