Asia ABS may fall on BD pull; premiums over PS disappear

By Clive Ong

SINGAPORE (ICIS)–Spot acrylonitrile-butadiene-styrene (ABS) values in Asia may weaken, dragged down by slumping values of feedstock butadiene (BD), and may wipe out the resin’s price premiums over polystyrene (PS), market sources said on Friday.

Spot prices of ABS have stagnated in the low-$1,900/tonne (€1,425/tonne) CFR (cost & freight) NE (northeast) Asia levels over the past two weeks, while prices of rival high-impact PS (HIPS) are now largely at above $1,950/tonne CFR China, according to ICIS data.

Raising ABS prices is proving difficult for producers, market sources said, as costs of the resin’s main feedstock BD have slumped 60% from mid-February based on ICIS data.

BD prices fell below $900/tonne CFR NE Asia in July from this year’s high point of $2,040/tonne CFR NE Asia in February.

ABS has a high BD content, making its market more sensitive to the price movement of the olefin, compared with its other feedstocks such as styrene monomer (SM) and acrylonitrile (ACN) – the prices of which have remained firm.

ABS used to enjoy a premium of around $200/tonne or more over HIPS, but this price gap has been disappearing since last year when demand significantly weakened.

Global demand for ABS from key sectors such as appliances and consumer electronics has weakened as the US and the eurozone – the major economies in the West and main export destinations for Asian goods – have remained in doldrums.

China, which is a key market in Asia, is showing definite signs of slowing down as well, further dampening resins trade.

“Now HIPS prices are at par or higher than ABS for certain grades. We cannot lift ABS values while PS prices are rising incrementally on buoyant styrene (SM),” said a Taiwanese resins producer.

ABS quotes are now nearing parity with general purpose PS (GPPS) and even styrene-acrylonitrile (SAN) – the prices of which are being buoyed up by SM in spite of weak demand.

SM prices reached record levels in the second half of July with prices pushing above $1,850/tonne CFR China.

GPPS is being quoted at the low-$1,900/tonne CFR China levels this week, indicating that it is nearing parity with ABS in Asia, a Korean resin distributor said.

“SAN prices are moving up along with GPPS as they do not have butadiene content,” said a trader in Hong Kong.

Suppliers are pessimistic over the near-term market outlook, with some suggesting that demand for styrenics would remain lacklustre into August.

“This year is very likely to be weaker than last year and many buyers of resins are keeping low inventories due to limited orders for finished goods,” said a resin producer in southeast Asia.

“While PS offers are being increased, overall demand is waning, hence PS is not much better than ABS”, said another resin maker in Taiwan.

ABS is used in appliances, consumer electronics, toys, and has applications in the automotive and construction sectors. PS is used in packaging, disposable consumer items, toys as well as consumer electronics.

($1 = €0.75)

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