06 September 2013 17:53 [Source: ICIS news]
LONDON (ICIS)--European acrylonitrile-butadiene-styrene (ABS) producers are targeting September price increases of €70-100/tonne ($92-132/tonne) because of rises and expected rises in upstream costs, sources said on Friday.
“We can say that we are going to ask for €100/tonne [increase in September contracts],” an ABS producer said.
The butadiene (BD) September contract price rose by €25/tonne and the styrene September contract price rose by €85/tonne. Although September contract negotiations for acrylonitrile (ACN) – ABS’s other feedstock – are ongoing, prices are expected to increase in line with the further upstream propylene September cost increase of €60/tonne.
“Feedstock increases are all settled, the composite costs went up by €70/tonne,” another producer said.
Nevertheless, the majority of buyers are aiming to limit any price increases to a maximum of €50/tonne because of weak demand and competitively priced imports from Asia.
“They [producers] announced plus-€100/tonne and it's not so nice a request. I hope it will increase [by] only plus €50/tonne,” a buyer said.
According to market estimates, imports from Asia represent around 30% of European consumption. Although Asian producers are expected to increase September prices, several producers and buyers said that increases are likely to be more limited to around €10/tonne because they have not been exposed to the same increase in feedstock costs.
“There is] still a lot of material coming from Asia as China's been quiet and [there’s] a lot of additional capacity [in the region],” a distributor said.
This is placing pressure on European producers to limit price rises.
“They are in many cases increasing the prices in Asia by small amounts, [and] that is causing some tension, as Asian producers represent about 30% of the market, and that's where we have discussions. Asian producers are not following to the full extent as they don't have these cost increases,” a producer said.
Coupled with this, demand is yet to recover following the traditional August low, despite optimism that consumption will increase in the second half of the year because of macroeconomic recovery.
"Weak demand, Asian price... will compensate the feedstock [increase]. From Asia - they are a little bit aggressive on the market,” a buyer said
Survey company Markit's eurozone's purchasing managers' index (PMI) rose to 51.4 in August from 50.3 in July to reach its highest level in over two years.
($ = €0.76)
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