FocusAsia ABS weakens on subdued demand after China holiday

09 October 2013 07:22  [Source: ICIS news]

By Clive Ong

ABS is a resin used to make toys, consumer electronics, appliances, and also has applications in the automotive and construction sectors.SINGAPORE (ICIS)--Spot acrylonitrile-butadiene-styrene (ABS) prices in Asia fell by $10-20/tonne (€7-14/tonne) this week on tepid demand despite the return of players in the key China market after a week-long holiday, traders and producers said on Wednesday.

Most players expect the market to enter a lull season in November, with the end of the manufacturing season for exports.

Traders are keen to reduce ABS stocks on hand that cargoes are being quoted at below $1,950/tonne CFR (cost and freight) China and Hong Kong this week.

The Chinese market re-opened on 8 October after a seven-day National Day celebration, but this failed to provide a reprieve to the market.

Demand is expected to taper off in the near term as the third-quarter manufacturing-for-exports season has largely ended, industry sources said.

Most Chinese factories have largely fulfilled their contracts for product exports. Buying momentum will likely stay soft in the coming weeks, they said.

ABS is a resin used to make toys, consumer electronics, appliances, and also has applications in the automotive and construction sectors.

“Demand [for ABS] is weak and is unlikely to pick up, hence there is a dearth in buying interest,” said a Hong Kong-based trader.

A major ABS producer has also reduced offers by $20/tonne this week, with increasing expectations that other producers would follow suit.

“Other makers will probably follow the lead and lower prices this week, or at best, some will keep offers stable,” said a producer in southeast Asia.

While offers were heard at $1,940-1,970/tonne CFR China, traders said that deals were concluded at prices that are at least $20/tonne lower.

Also dampening buying interest for ABS is the recent decline in prices of feedstock styrene monomer (SM) below $1,800/tonne CFR NE (northeast) Asia.

Most buyers expect prices to ease further and hence were in no hurry to pick up parcels.

“The weak performance in SM prices have prompted some buyers to [adopt a] wait-and-see stance],” a Taiwanese producer said.

However, continued price strength of other feedstocks – butadiene (BD) and acrylonitrile (ACN) – are squeezing the margins for ABS producers.

“Producers are trying to keep resins prices from falling sharply as their margins are thin. While SM has weakened, elevated BD and ACN prices meant margins are still thin,” said another Hong Kong-based trader.

($1 = €0.74 / $1 = CNY6.12)

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

By: Clive Ong
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