05 April 2013 12:16 [Source: ICIS news]
LONDON (ICIS)--Buyers and sellers in the European acrylonitrile-butadiene-styrene (ABS) market expect to see reductions in April contract prices following a €64/tonne drop in the April feedstock styrene contract price, market sources said on Friday.
One producer said its starting point for negotiations will be a reduction of €20/tonne ($26/tonne) based on the lower styrene cost, and expected drops in feedstock acrylonitrile following the €50/tonne decrease in propylene.
Other producers are expected to offer lower prices for their April contracts, though negotiations are still on-going and exact price targets have not been confirmed.
On the buy side, expectations are higher, with some buyers looking to negotiate up to €50/tonne off their April prices.
“Our largest supplier has offered a reduction €40/tonne straight away, we didn’t have to ask for it. As they were so quick to offer this reduction we presume they would be willing to give a bit more if pushed,” a buyer of compounding grade ABS said.
In terms of demand, a major producer said it saw lower levels at the end of March as it became clear that raw material costs would drop in April, but it also saw low demand from certain customer sectors.
“What is a bit more worrying is, looking more by customer size, there is a clear pattern… mid-to-small customers, and distributors and compounders, [volumes] are on the low side. Volumes are clearly declining,” the producer said.
This may be due to original equipment manufacturers (OEM) choosing to utilise in-house production rather than acquire components from outside sources.
Despite these recent changes in demand levels from certain sectors, overall demand is stable, with no clear sign of any pick-up in the coming weeks.
“Demand [is] pretty flat, no real changes since beginning of year,” a UK-based distributor said.
Some European buyers have turned away from Asian suppliers this week, as a weakening euro has made Asian product less attractive for consumers. Only if Asian suppliers lower their prices by about €50/tonne would buyers consider waiting the 6-8 week delivery period for Asian-produced ABS, a European buyer said.
Demand in Asia continues to decline following the Lunar New Year holiday period which ended on 15 February. Many players expected demand to increase as the region enters its key manufacturing period, but as yet, demand has failed to ignite.
ABS prices increased €30-40/tonne in March because of higher feedstock costs, to €2,235-2,295/tonne free delivered (FD) northwest Europe (NWE) for compounding grade, €2,325-2,400/tonne FD NWE for injection moulding (natural) and €2,250-2,400/tonne FD NWE for extrusion grade (natural), according to ICIS.
ABS is widely used in the automotive and household goods sectors, in the production of car interiors and domestic appliances.
($1 = €0.77)
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