SINGAPORE (ICIS)--Asia’s acrylonitrile-butadiene-styrene (ABS) market weakened further this week with demand from end-users and traders staying lacklustre.
The ongoing US-China trade war continued to dampen sentiment, causing market participants to be cautious.
- Buyers wary of building inventories
- Demand stays weak despite Q3 manufacturing-for-exports season
- ABS makers mull output cuts amid shrinking margins
“Traders and end-users do not want to keep much inventories, hence buying momentum is weak,” a China-based trader said.
Spot prices in the key Chinese market declined below $1,900/tonne CFR (cost & freight) this week, as buyers mostly kept to the sidelines.
ABS resins are used for appliances, toys, consumer electronics; and has applications in the construction and automotive sectors.
However, with feedstock costs staying elevated, margins of ABS producers have been eroded. Margins look likely to worsen as resin prices continued to decline.
“Most makers have little or negative margins already,” Taiwan-based producer said.
Some producers are considering lowering output as negative margins appear set to stay. A major producer in China - Dagu Chemical - has reduced operating rates recently, with others considering similar moves.
While the third-quarter manufacturing season-for-exports is well underway, demand for ABS has remained below expectations on heightened concerns over the US-China trade war.
Resins demand usually picks up during the manufacturing season which straddles July to October, when finished goods are shipped to the US, among other countries, for the year-end holiday sale.
ABS supply in Asia remained ample as buyers and traders were hesitant to stock up. Buyers preferred buying on a need-to basis, while traders looked for back-to-back business.
“End-users were cautious in accepting orders for finished goods, since the tariffs war is escalating,” said a trader in Hong Kong.
Focus article by Clive Ong
Picture: Interior of a car at a China automobile plant in Suzhou city, Jiangsu province, China. Acrylonitrile butadiene styrene (ABS) resins have applications in the automotive sector. (Source: Imaginechina/REX/Shutterstock)