Price and market trends: Asia ABS rebounds on buoyant feedstock, demand weak

24 May 2013 09:17  [Source: ICB]

Although restocking is taking place down the supply chain, fears remain of poor demand in the US and Europe

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 16 May.

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.

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.

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," said another trader in Hong Kong. ABS resins are used in the construction and automotive sectors.

By: Clive Ong
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