Asia ABS to weaken further near term on low SM, BD prices

Focus story by Clive Ong

SINGAPORE (ICIS)–Spot prices of acrylonitrile-butadiene-styrene (ABS) resins in Asia may continue to weaken in the near term – taking the cue from upstream styrene monomer (SM) and butadiene (BD) markets –  because of poor demand, industry sources said on Friday.

After a strong run-up in the previous two weeks, prices haves eased off $2,000 tonne/year, as regional demand for resins have remained below expectations, they said.

Some deals were heard concluded this week at $1,950-1,980/tonne CFR (cost and freight) China, they said.

“Spot prices of ABS have slipped some $10-20/tonne this week as demand is soft,” a Hong Kong-based trader said.

On 15 August,  ABS spot prices were assessed at $1,950-2,000/tonne, unchanged from the previous week, according to ICIS data.

Spot ABS prices began rising from the low- to mid-$1,900/tonne CFR (cost & freight) NE Asia levels in early July to $2,000/tonne CFR NE Asia this month, as suppliers raised prices to boost margins.

The spike in prices, however, could not be sustained given continued weakness in demand, coupled with plunging feedstock costs, market sources said.

SM prices slipped below $1,600.00/tonne CFR China in mid-August, down 2.3% from a month ago, while BD prices shed 11.4% over the same period to $1,400.00/tonne CFR NE Asia, according to ICIS data.

While most suppliers have not lowered offers, dealers have reduced prices in order to move cargoes.

Some buyers, on the other hand, have decided to adopt a wait-and-see mode, expecting prices to weaken further.

“We have bought some parcels last two weeks but have not picked up any this week since prices are softening,” said an end-user in southern China.

Consumption of ABS resins failed to pick up significantly amid the current the current peak manufacturing-for-exports season in China, with geopolitical tensions and the uneven global economic expansion continuing to dampen demand for Asian-made goods.

Orders for finished goods have started to dwindle in the first half of August, pointing to a weaker-than-expected manufacturing season, according to some ABS users.

“Usually, orders will start to taper offer in early September, but this year it is around half to a month earlier,” said another end-user in southern China.

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

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