FocusChina ABS producers target Europe markets

22 April 2013 15:51  [Source: ICIS news]

LONDON (ICIS)--Chinese producers of acrylonitrile-butadiene-styrene (ABS) may be targeting the European market with low-priced commodity grade product because of excess stock levels and poor demand in Asia, according to market players.

Demand in Asia has been in decline since February when manufacturing in the region failed to pick up following the Lunar New Year holiday. As a result, large stock levels of materials, including ABS, have been accumulated despite Asian producers dropping production rates to almost 60%.

Traditionally, China was a net importer of ABS, taking up to 21,000 tonnes of European-produced ABS in 2009, according to Eurostat data, driven by high levels of manufacturing.

“There was quite a lot of capacity being sold back to China up until last year. They were like a bottomless pit that [European producers] had to keep feeding,” a European trader said.

However, with the global economy showing no sign of recovery, China has seen a drop in its resins demand as exports of the country's finished goods have fallen sharply because of a lack of global demand.

“[In 2012], China was importing 1.7m tonnes in ABS, the bad news is it's 10% down for a second consecutive year,” a European producer said of global imports into the country.

Export data from statistics agency Eurostat shows that exports from the EU 27 countries into China has been in decline since 2009, with a 16% drop from 2011 to 2012.

Yearly ABS exports to China (tonnes)

Jan.-Dec. 2009

Jan.-Dec. 2010

Jan.-Dec. 2011

Jan.-Dec. 2012

21,553

16,033

16,645

13,904

As a possible result of over-production, high stock levels and falling demand, Chinese producers may start to look at becoming exporters, selling Chinese-produced ABS on the European spot market.

European buyers have been approached by small Chinese producers recently, offering small volume cargoes at prices up to $500/tonne below European producers.

“Now we are also seeing offers coming out of China, which is a bit of a step-change, … [we] usually see South Korean [material]”, a European buyer of extrusion grade ABS said recently, adding “this is new, 'un-tested' [material]”.

As recent as 12 April, there was talk of other Chinese parcels being offered to buyers in southern Europe.

“Some regions are reporting exotic materials coming from China, very low price levels, but more sporadic,” a European producer said.

It is likely that these parcels from China are going to be few and far between, and European buyers are still uncertain if the grade of material would match their specific product specifications.

Whether or not European buyers decide to invest in Chinese product, the very act of offering the cargoes for purchase highlights China’s, and Asia’s on-going decline in ABS demand.

($1 = €0.76)


By: Matt Tudball
+44 208 652 3214



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