Asia’s ABS prices likely to remain weak on slow demand

5 June 2014 | Clive Ong

SINGAPORE (ICIS)--Asia’s acrylonitrile-butadiene-styrene (ABS) prices are likely to remain weak amid persistently slow demand in the region and slippages in feedstock styrene monomer (SM) values, traders and producers said on Thursday.

Spot SM prices to below $1,570/tonne CFR (cost & freight) China on 4 June amid mounting inventories along the eastern China shore tanks. SM spot inventories were estimated on the same day at around 168,500 tonnes, up by 15,900 tonnes week on week, according to ICIS data.

"The high SM stocks continue to point to weak offtake from the styrenic resins sector", said a resins producer in southeast Asia.

While most ABS suppliers kept offers unchanged this week in the low-to-high $1,900s/tonne CFR northeast (NE) Asia, a number of traders lowered offers in a bid to engage buyers.

"We received offers this week that were $10-15/tonne lower than previous quotations," said an ABS user in southern China.

Spot ABS lots were heard available in the high $1,800s/tonne CFR China and Hong Kong this week.

Recent weak economic data out of China continued to suggest that the world's second largest economy has not yet attained escape velocity.

The country’s official purchasing managers’ index (PMI) reading for May stood at a five-month high of 50.9, but remain just slightly above the 50 threshold that indicates an expansion in the economy, while the investment bank HSBC’s final May PMI reading for China still denotes a contraction at 49.4.

"With China's growth still stagnant and uneven economic growth in the US and the eurozone, demand for Asia made finished products will stay weak," said an ABS trader in China.

Others pointed to the tight credit conditions in the mainland as factors hampering the resins trade and curbing ABS demand, on top of lower consumption of ABS due to weak external demand of finished goods.

"There are issues with financing in China and traders and end-users continue to be affected," said an ABS producer in Taiwan.

Traders and users continue to buy on a need-to basis and most preferred to maintain lean inventories in view of uncertain demand in the near term.

"Most users are buying sufficient resins to fulfill their production needs and no more; and few are stocking up especially when prices are on the down trend," said a trader in Hong Kong.

Major producers in northeast Asia include Chimei Corp, Formosa Chemical & Fibre Corp, Cheil Samsung and LG Chem.

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


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