Asia ABS firms up on demand but market participants cautious

Focus story by Clive Ong

SINGAPORE (ICIS)–Asia acrylonitrile-butadiene-styrene (ABS) prices are firming up in April as demand grows but no sharp increases are expected, traders said on Wednesday.

After some pick-up in demand in March, sellers of ABS expect buying interest to gradually improve in the second quarter.

“While the improvement in demand was slight in March, buying momentum should still continue to build in April as production in China kicks into higher gear,” said a trader based in Hong Kong. 

However, market participants are not looking for any sharp pick up in the near term, given the uneven economic growth worldwide.

The slow-down in China and credit curbs are expected to rein in resin trade, including ABS.

“We are hoping for continued demand recovery in the second quarter although overall ABS consumption will not likely exceed [that of] last year,” a Taiwanese producer said.

With fewer than expected amount of orders for finished goods received, moulders reported limited pick up in the Chinese exports sector.

“Our orders so far remained below expectations, so it is likely that business in the second quarter will not surpass last year,” said an ABS user in China.

ABS prices hovered in the mid $1,800s/tonne CFR (cost & freight) NE (northeast) Asia to the low $1,900s/tonne CFR NE Asia in March, according to ICIS data. Suppliers are currently seen trying to push prices at $1,900/tonne CFR NE Asia and above in April.

Recent buoyancy in key feedstock styrene monomer (SM) values in the low-to-mid $1,600s/tonne CFR China prompted ABS makers to target higher resin values.

Butadiene (BD) prices have also rebounded to $1,250/tonne CFR NE Asia while acrylonitrile (ACN) traded around $1,950/tonne CFR NE Asia.

“ABS has the worst margins among other styrenic plastics,” said a styrenics producer in Taiwan.

Some buyers have started to accept price increments, although not to the extent suppliers want,  as they sought to replenish stocks this week.

“Some deals were seen $10-20/tonne higher as some buyers accepted slightly higher prices,” said another trader in Hong Kong.

ABS is used to make toys, consumer electronics, appliances  as well as in the automotive and construction sectors.

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