China ABS demand to stay depressed amid prolonged trade war

Author: Claire Gao

2019/08/20

SINGAPORE (ICIS)--Demand for acrylonitrile butadiene styrene (ABS) in China is expected to stay depressed following recent escalation in the country’s protracted trade war with the US.

Household appliance buyers in Qingdao, China. (Photo by Wu Hong/EPA/Shutterstock)

Current offers are stable, with sellers busy fulfilling last week’s orders, while a majority of buyers are adopting a wait-and-see stance on the market.

Spot ABS prices in east China were assessed on 16 August at yuan (CNY) 11,300-12,300/tonne DEL (delivered), down by CNY100-150/tonne week on week, according to ICIS data.

Trades picked up toward the end of last week as prices fell to their lowest since February 2018, allowing for a slight market rebound, but actual downstream demand may not improve much.

ICIS Editorial Chart goes here

“Since the trade war, downstream producers have been cautious towards feedstock purchases and kept inventories low,” a trader said.

“This round of rebound is supported by downstream producers’ stock replenishment and is not sustainable,” he said.

Domestic ABS prices have largely headed south since the China-US trade war began in the second half of 2018.

East China prices were down by about 25% from early August 2018 levels, ICIS data showed.

The US-China trade war has been ongoing since 6 July 2018, with high tariffs imposed a total of $360bn worth of goods between the two countries to date.

In September this year, US tariffs of 10% will apply on additional $300bn worth of Chinese goods, as announced by US President Donald Trump in mid-August.

ABS resins are thermoplastic engineering plastics, which are mainly used in home appliances, automobiles and toys – downstream industries heavily hit by tariffs.

Globally, China has a substantial share in the production of home appliances and toys.

But manufacturing activities in the world’s second-biggest economy have remained in contraction mode for three consecutive months since May.

Focus article by Claire Gao

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ICN