Chemical profile: Europe ABS

10 January 2014 09:47 Source:ICIS Chemical Business

Acrylonitrile-butadiene-styrene (ABS) is the largest volume engineering resin. Major uses are in the automotive and electronics sectors. Other applications include appliances, pipes, fittings and other construction products, and recreational items such as boats, mobile phones and games consoles. ABS is also blended with other polymers such as polycarbonate (PC) or polyvinyl chloride (PVC) for injection moulding applications.

There have been no major supply disruptions in the European market during 2013, and the market has been well supplied throughout the year. Some producers have been running at 80-90% of capacity during the year depending on seasonal demand levels.

European demand levels in 2013 were similar to that of 2012, according to most market participants. Demand from the automotive industry suffered, but this has been balanced out by better demand from the appliances and electronics sectors.

Demand followed seasonal trends for most of the year, with slowdowns in May because of a spate of public holidays in Europe, and in August, which is traditionally a slow month because of summer vacations.

September, which traditionally sees buyer restocking, saw a surprising lack of demand because of uncertainty about the geopolitical situation in Syria and its impact on crude oil and naphtha prices. Record-high styrene spot prices at the beginning of September compounded this, leading buyers to hold off making all but essential purchases.

Sentiment at K Fair 2013, the plastic world’s largest European event, was optimistic. Both producers and compounders/distributors at the event, which is held every three years, said they were satisfied with demand levels during 2013 given the fact that the European economy is still recovering.

US demand has been driven by the automotive and housing sectors. Auto sales in 2013 climbed 7.6% from 2012 to 15.6m units, according to US research firm AutoData. US November sales of new single-family homes were up 16.6% year on year to a seasonally adjusted annual pace of 464,000 units, the US Department of Commerce reported.

Competitively priced Asian material, particularly injection moulding grade, has been readily available in Europe, with product from South Korea benefiting from reduced import duty rates due to a free trade agreement between the country and the EU. On 1 July 2014, import duty on all ABS from South Korea will be reduced to zero.

ABS prices in 2013 were largely driven by movements in feedstock styrene and acrylonitrile (ACN), and seasonal changes in demand. ABS prices for all three grades – injection moulding (black, natural and coloured), extrusion and compounding – followed styrene up in January 2013, with injection moulding grade, the highest-priced grade, reaching a 2013 peak at €2,363/tonne in April.

ABS prices tracked styrene and ACN until July, when the €250/tonne drop in the butadiene (BD) July contract price brought ABS down by €30/tonne. ABS prices only started to recover in September, rising €65/tonne, when BD, styrene and ACN prices rallied.

December prices rolled over despite higher feedstocks and an attempt by Styron to increase prices by €30/tonne. A second producer kept its prices stable but is looking for higher prices in January 2014 because of further increases in styrene and BD.

ABS is made by the polymerisation of styrene with ACN and BD. Three main processes are emulsion polymerisation, suspension and continuous mass polymerisation – the last preferred because the reaction does not take place in the aqueous phase, resulting in less effluent disposal and lower energy needs. Resins with enhanced colour consistency can be produced. But the emulsion route gives more flexibility in its products and is used to produce high-impact grades.

Growth in the European market in 2014 is not expected to be more than 1-2% above 2013 levels, according to market participants. The overall economic situation in Europe remains subdued, with the automotive sector in particular expected to be slow into 2014.

ABS buyers are likely to continue to ­purchase hand-to-mouth in 2014 as they did throughout 2013. Most consumers want to keep stock levels low as they do not get caught with large amounts of high priced ­materials if there is a sudden drop in feedstock costs.

The European market will continue to watch the price of Asian imports. Data from Eurostat show that September year on year exports from South Korea and Taiwan, the two largest ABS exporters to the EU, were down in 2013 by 4.4% and 9.3%, respectively. However, the FTA between the EU and South Korea could lead to an increase in South Korean material into Europe.

By Matt Tudball