FocusAsia ABS falls below $1,900/tonne; may stay soft on weak demand

07 March 2014 04:47  [Source: ICIS news]

Focus story by Clive Ong

ABS is used to make toys, appliances, consumer electronics as well as in the automotive and construction industry.SINGAPORE (ICIS)--Spot acrylonitrile-butadiene-styrene (ABS) prices in Asia fell below $1,900/tonne this week, with suppliers lowering prices to draw buyers forward amid a general lull in demand, traders said on Friday.

Some sellers are liquidating parcels in the mid- to high-$1,800/tonne CFR (cost and freight) NE (northeast) Asia levels, they said.

“Demand is weak as end-users have few orders for finished goods on hand,” a Hong Kong-based trader said.

Any improvement in demand may only be felt in the second half of the year, market sources said, as global economic recovery is still at a nascent stage.

End-users of ABS in Asia saw a minimal pick-up in business post-Lunar New Year, which is celebrated in the northeastern and southeastern parts of the region.

China was on holiday for a full week from 31 January to 6 February for the Lunar New Year celebration.

“Our usage of ABS is still low and is not likely to pick up in the near term,” a China-based end-user said.

ABS buyers have remained hesitant to procure cargoes because of the volatile swings in prices of feedstock styrene monomer (SM) over the past several weeks.

Those with requirements have been buying small volumes to meet immediate needs, while most are preferring to adopt a wait-and-see stance until a clearer price direction emerges, market sources said.

ABS producers are also contending with poor margins, as prices another feedstock acrylonitrile (ACN) remained elevated at above $2,000/tonne CFR NE Asia.

But buyers are insisting on lower ABS prices, pointing to weakness in values of both SM, and the third feedstock butadiene (BD).

ABS traders and buyers are preferring to delay commitments amid this week’s price downtrend. Some sellers, however, are cautiously optimistic that buying momentum will pick up in the weeks ahead.

“Buyers cannot wait indefinitely as they will need to stock up resins unless their production stops,” said a southeast Asia-based trader.

Inventories among ABS users have whittled down over the past several weeks because of the buyers’ general reluctance to beef up stocks while prices are still falling.

Most sellers expect a significant pick-up in buying interest to emerge towards the middle of the year, ahead of the manufacturing-for-exports season in the third quarter.

ABS is used to make toys, appliances, consumer electronics as well as in the automotive and construction industry.

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

By: Clive Ong
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