FocusAsia ABS rebounds on buoyant feedstock, demand weak

16 May 2013 04:30  [Source: ICIS news]

By Clive Ong

ABS goes into making of toysSINGAPORE (ICIS)--Asia acrylonitrile-butadiene-styrene (ABS) prices trended higher in the first half of May gaining up to $50/tonne (€39/tonne) to the relief of suppliers though demand remains weak amid slow end-user orders, market participants said on Thursday.

Spot prices had been on the downtrend since March with losses of around 10% by the time prices dipped below $1,850/tonne CFR (cost & freight) NE (northeast) Asia in late April.

However, buoyant feedstock styrene monomer (SM) prices and a revival in butadiene (BD) values saw ABS prices bottoming out in early May and moving higher subsequently.

“ABS prices are way too low as they were below prices of high impact polystyrene (HIPS)”, said a producer.

ABS prices usually command a premium of around $200/tonne over HIPS but poor demand for ABS has caused prices to fall below HIPS values this year.

The key appliance sector for ABS has been particularly weak.

HIPS prices were in the high $1,800s/tonne CFR China when ABS prices declined below $1,850/tonne CFR NE Asia.

While ABS prices have rebounded by some $50/tonne in the first half of May to above $1,900/tonne CFR NE Asia for certain brands, other styrenic resins like polystyrene saw a smaller uptick in prices.

 “ABS prices had a more severe downswing compared to other styrenics, hence they are seeing a bigger bounce currently,” said a trader in Hong Kong.

As inventories along the supply chain have dwindled over the past two months, a number of producers have increased output.

“The third quarter Chinese manufacturing season in nearing and most suppliers would ideally build some stocks in anticipation of stronger demand,” said a South Korea-based producer.

However, most market participants tempered their optimism with some caution, given the persistently weak economic conditions in the US and the Eurozone, which are big markets for China made products.

“Traders were seen restocking some ABS while buying interest from end-users remained tepid,” said a supplier in Taiwan.

End-users remained hesitant to pick up large volumes as orders for finished goods remained limited so far.

Chinese ABS operating rate were at 67% for the week ended 10 May, up from around 62% a month ago. While operating rate have picked up gradually, it remains far from the usual peak of around 80% witnessed during season peak demand.

“Overall demand is still quite slow for ABS but we hope it will improve into the third quarter,” said another trader in Hong Kong.

ABS resins are used to make toys, appliances, consumer electronics as well as in the construction and automotive sectors.

($1 = €0.77)

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

By: Clive Ong
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