Price and market trends: Asia ABS prices rise with feedstock styrene

28 June 2013 10:00  [Source: ICB]

Buying interest improves in line with buoyant feedstock, but demand from end-users has not picked up significantly

Asia acrylonitrile-butadiene-styrene (ABS) prices were rising as suppliers raised offers but the long-term outlook is bearish amid lacklustre end-user demand, traders said.

Offers of major brands were up by some $20-30/tonne the week ended 21 June on the back of buoyant feedstock styrene monomer (SM) prices.

SM prices rose to the mid-$1,700s/tonne (€1,275/tonne) CFR (cost & freight) China amid tight availability, prompting ABS makers to revise offers higher.

"Buying interest was evident among traders who were willing to stock up some resins in view of strong SM prices," said a producer in southeast Asia.

While buying interest from the trade showed some improvement, demand from end-users did not pick up significantly.

Orders for finished goods have flowed into the hands of larger moulders in China but most were content to buy on a need-to basis and to avoid stockpiling. Medium-to-smaller factories continued to see limited orders and hence buying impetus was weak from them.

"June and July will probably see weak demand from end-users before a pick-up is seen in August," said a trader in Hong Kong.

The third quarter manufacturing for exports season in China typically lasts from August to October each year. However, with the US and eurozone economies mired in malaise, Asia ABS suppliers anticipate lower than usual demand for resins compared to previous years.

"Demand will pick up in the third quarter but will probably be weaker than past years as the export markets are weak," said a producer in Taiwan.

A number of ABS traders are also concerned with the slump in butadiene (BD) prices to the low $1,300s/tonne CFR NE Asia, from the high $1,400s/tonne CFR NE Asia a month ago.

"The fall in BD values could dampen sentiment among end-users although SM remains strong," said another trader in Hong Kong.

Nonetheless, ABS makers continued to target higher resin prices as BD component in the manufacturing of ABS is usually less than 20% while SM comprised some 60% of ABS.

Some suppliers are cautiously optimistic that ABS prices could reach $2,000/tonne in the near term as prices are depressed relative to other competing plastics like high impact polystyrene (HIPS).

Prices of ABS and HIPS are at a near parity since the start of the second quarter as ABS demand was in the doldrums. ABS usually commands a $200/tonne or more premium normally.

By: Clive Ong
+65 6780 4359

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