ABS market faces downward pressure in Asia

27-Jun-11
In China, ABS prices mostly followed a stable trend over the past week, especially in the import market as sellers complain about seeing slow buying interest, as per ChemOrbis. Yet, most of them stood ground regarding their offer levels as they do not want to squeeze margins. A South Korean producer reported selling half of July quotas this past week, struggling during deal conclusion amidst weak buying interest. Meanwhile, another South Korean producer held onto stable offers despite their poor sales since with the belief that price reduction will not help with any improvement in demand. “It might push away buyers further and therefore, we maintained our prices this week,” he further added. On another note, a trader offering Taiwanese ABS also unchanged offer levels, despite slow sales performance amidst bearish market sentiment. Looking at the local market, overall offer levels for Chinese ABS only fluctuated down by CNY50/ton (US$7/ton) at the low end of the range while it moved up CNY100/ton (US$15/ton) at the high end on FD basis during this past week. For foreign origin ABS, prices moved up by CNY200/ton (US$30/ton) at the low end and remained stable at the high end over the same period and with the same terms. Within the ranges, a distributor reported conceding to CNY50-100/ton (US$7-14/ton) discounts in order to speed up their sales. Players agree that overall demand is stagnant despite sellers’ low stock levels since buyers do not want to exceed their immediate needs when making fresh purchases. Apart from the weak demand, softer styrene and oil costs also put pressure on the Asian ABS market. Styrene costs lost US$65/ton since the beginning of June while oil prices retreated by US$9.27/bbl over the same period, nearing the US$90/bbl threshold. Spot ACN costs also lost US$25/ton on CFR Far East Asia basis but spot butadiene prices moved up by US$500/ton on CFR China basis compared to last week. Nevertheless, stronger butadiene prices are not expected to support any price hike attempts since most market players expect to see decreases for this week on ABS prices given the sluggish demand.
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