Asia ABS offers rise as sellers wager on renewed buying interest

Source: ICIS News

2019/03/14

SINGAPORE (ICIS)--Asia’s acrylonitrile-butadiene-styrene (ABS) market strengthened this week with suppliers targeting higher numbers, citing elevated feedstock costs.

ABS is used to make LEGO products. (James Gourley/REX/Shutterstock)

Sellers are also wagering that buying momentum will subsequently increase as manufacturing activities in the key Chinese market usually kick into a higher gear in the second quarter.

Spot prices of ABS increased from last week to $1,550-1,660/tonne CFR (cost & freight) China, depending on the parcel size and origin, while some traders thought that prices could have reached a temporary peak.

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Some sellers conceded that demand has not picked up as substantially as the offers.

While ABS buyers have resisted the price increases in recent weeks, some buyers have stepped back into the market to replenish stocks, on concerns that prices might escalate further to the upside.

“Offers have increased but we will have to see if demand truly follows in the near term,” a southeast Asian-based producer said.

While key feedstock styrene monomer (SM) prices held mostly steady in recent weeks at just under $1,100/tonne CFR China; prices of the other feedstock, acrylonitrile (ACN), have surged on plant outages in Europe and the US.

Spot ACN prices have reached $1,750/tonne CFR NE (northeast) Asia in March, from the low-$1,400/tonne CFR NE Asia levels in January, ICIS data showed.

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“ACN prices have increased a lot in recent weeks, so most ABS makers have to adjust resin prices upwards,” said producer in Taiwan.

ABS resins are used for appliances, toys, consumer electronics, and have applications in the automotive and construction sectors.

Expectations of firm SM values in the weeks ahead despite record high inventories in China also gave ABS makers the impetus to raise prices.

A slew of SM units will kick off maintenance shutdowns from March to June, potentially resulting in constrained supply down the road.

“SM supply will likely tightened in Q2 due to maintenance shutdowns,” said a resins trader in China.

The lack of concrete announcements from the ongoing US-China trade talks continued to constrain demand of ABS, especially in China, where tariffs have been initially proposed for appliances.

Most buyers remained cautious and were not keen to build up too much inventories.

Focus article by Clive Ong

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