OUTLOOK ’19: US PC, ABS markets facing low-priced imports

Amanda Hay

04-Jan-2019

HOUSTON (ICIS)–The US polycarbonate (PC) and acrylonitrile-butadiene-styrene (ABS) markets have begun 2019 in a similar scenario with regard to low-priced imports from Asia.

Global PC capacity expansions are expected to continue to weigh on markets into 2019, with supply outpacing demand and import prices potentially remaining depressed.

Capacity expansions in China have dampened import sentiment in the country, causing a price plummet in Asia and for imports into the US over the last six months.

Domestic US markets will continue to face competition from low-priced imported material, which was being offered around 20 cents/lb lower than US-produced material as of late 2018.

Domestic producer pricing has been relatively stable, moving in tandem with feedstock costs as supply has been sufficient to meet demand.

The spread between US and Asia prices could widen further, depending on buyer requirements.

Buyers with specific material needs have continued to pay US prices, so domestic producers have not lowered their prices to match competitive offers from Asian suppliers.

Buyers who do not have specified applications, however, have considered alternatives.

“Low-end applications will make the switch fairly quickly, but there is enough to go around,” a source said.

Sentiment remains bearish in 2019 amid a persistent supply glut due to capacity additions, which will keep pressure on US prices.

“Regardless of tariffs, there will be global reshuffling of trade patterns, and the total pricing for PC will continue to fall and stay depressed,” a source said.

Demand for US material has been strong in 2018 amid a robust economy. The outlook for 2019, however, is more uncertain, with trade war concerns persisting into the first quarter.

US ABS prices weakened in November and December amid persistently falling prices for imports from Asia and the sharp decline in feedstock prices – especially styrene – the last few months.

Cheaper prices for imports from Asia are directly related to thin ABS demand in China. While the current scenario may not change much early in the new year, styrene and ABS prices in China turned around slightly during the first half of December for the first time in two months.

Like PC, in various ABS applications, moulders cannot use another grade or material than those previously approved by the end user. There is some protection against price erosion for producers in these types of agreements.

“In a nutshell, the material is selected and is specified, and they cannot use another grade or material except the specified material.  If a moulder uses a different material, it is in violation of the agreement with the end user,” one market participant said.

Historically, US ABS prices spike in January, and trend higher for at least the first quarter. That is not likely to be the case this month, with falling feedstock prices and the presence of lower priced imports in the market.

ICIS assessments for US ABS are strictly formula-based and tied to upstream price movements.

Focus article by David Love and Amanda Hay

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