OUTLOOK ’18: Asia ABS, SAN uptrend may be capped on slower demand

SINGAPORE (ICIS)–The uptrend of Asia’s acrylonitrile-butadiene-styrene (ABS) prices may be capped due to slower demand approaching the Lunar New Year in February.

In the week ended 22 December 2017, spot ABS prices averaged $2,045/tonne CFR (cost and freight) northeast (NE) Asia, around an 8% increase since early November. Price increases in December were backed by tight supply and firmer feedstock styrene monomer (SM) prices.

Styrene-acrylonitrile (SAN) prices also rose in late December, on the back of cost pressures from feedstock SM.

Spot SAN prices ranged from $1,780-1,900 CFR NE Asia in the week ended 22 December, higher than $1,700-1,800 CFR in the previous month.

“There would not be a big change in ABS and SAN prices early this year, this will depend on demand and feedstock levels. Key feedstock styrene monomer (SM) is firm in recent weeks, so prices are likely to be stable,” a producer said.

In late December, spot feedstock SM prices softened due to recovering inventory levels in east China. Stockpiles of SM in east China rose by 18% from the previous week. An increased supply of feedstock SM could lower raw material and production costs for ABS and SAN.

Demand for ABS and SAN is expected to be slower in February amid the Lunar New Year festivities, as factories would run at reduced rates. China, which is a key market for ABS, will be on holiday for a week from 15-21 February.

While buyers were willing to purchase cargo in spite of rising offers by ABS producers in December, buyers said that further price hikes would not be workable.

“If prices continue to rise above $2,100/tonne CFR NE Asia in January, the sales might be affected,” said a buyer in China.

However, prices are not expected to fall due to cost pressures on ABS producers.

“Even if SM softens, there is not much room for prices to drop due to conversion and production costs,” a Taiwanese ABS producer said.

Trinseo HKG started its 75,000 tonne/year ABS plant in Zhangjiagang in October 2017. However, its impact on supply is minimal because of its relatively small capacity.

CNOOC & LG Petrochemical’s new ABS plant, at a capacity of 200,000 tonne/year, will likely have a more significant impact on supply. The plant is expected to start up by end-2018 or early 2019.

Market players were concerned about the impact of possible anti-dumping duties on feedstock SM by the Chinese government.

China may implement anti-dumping duties for SM imports from South Korea, Taiwan and the US. Investigations began in 23 June 2017, with preliminary measures likely in February 2018.

The uncertainty surrounding the ADD probe could further increase SM volatility, therefore inadvertently impacting ABS prices.

Environmental checks in China could also put pressure on ABS production.

Production plants in Nanjing faced production cuts of up to 50% during 9-15 December. Affected plants included major ABS producer Chimei in Jiangsu.

Outlook article by Danielle Goh