29 May 2013 10:06 [Source: ICIS news]
By Clive Ong
SINGAPORE (ICIS)--Spot prices of high impact polystyrene (HIPS) and acrylonitrile-butadiene-styrene resins have been trading at near parity since the start of the second quarter with situation unlikely to change in the near term, traders and producers said on Wednesday.
With demand in consumer electronics and appliance sector remaining lacklustre, the unique parity in prices has hampered the trade of both resins, traders and producers added.
Traditionally, ABS commands a premium of more than $200/tonne (€156/tonne) over HIPS but that has narrowed since the second half of last year as demand for ABS has been weak.
“The exports of finished goods, especially appliances and consumer electronics, to Europe and US have been weak since last year, resulting in poor demand for ABS,” said a trader in Hong Kong.
After reaching parity with HIPS, ABS prices even traded below the former for several weeks in the second quarter this year, according to ICIS data.
“With ABS prices so close to PS, demand for PS has shrunk as well,” said a Taiwanese producer.
Certain users of HIPS could switch to using ABS as it offers higher impact strength which will then result in lower consumption of HIPS.
However, even with a portion of users switching to ABS, the overall demand for the resin continues to languish amid lower production of key sectors like appliances and consumer electronics.
“With the economic malaise in the Eurozone and the US, demand for Asia made goods is unlikely to improve significantly in the near term,” said another Taiwan-based resin producer.
Despite buoyant feedstock styrene monomer (SM) prices at above $1,700/tonne CFR (cost & freight) China in mid-May, ABS prices could not gain much headway over HIPS values.
Both resins have posted gains to around $1,900/tonne CFR NE (northeast) Asia in May but prices continue to trade at a near parity.
“ABS makers are unable to lift prices higher than HIPS as the key appliance sector did not show any significant improvement,” said a resin maker in southeast Asia.
While ABS prices stagnant, demand for HIPS has also dampened with end-users unwilling to pay current prices.
“Buyers kept comparing HIPS prices to ABS and are less willing to commit as they feel they are not getting a good price,” said another trader in Hong Kong.
ABS and HIPS resins are both used in the manufacturing of toys, appliances and consumer electronics.
($1 = €0.78)
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