Plunging feedstock costs weigh down global ABS prices

ABS prices in China, Italy and Turkey are said to be facing downward pressure as steeply declining butadiene and ACN prices in Asia and Europe have pulled down producers’ costs and lent support to buyers in their search for lower prices, as per ChemOrbis. ABS demand has been discouraging in both Asia and Europe as buyers prefer to wait in the sidelines in anticipation of further price cuts in the days ahead. In China, import ABS prices posted decreases of US$20-90/ton after the National Day holidays as sellers offering at the upper ends of the pre-holiday range withdrew their offers in response to a lack of buying interest. Sellers pointed to weakening upstream costs as the primary reason for declining ABS prices as spot butadiene and ACN prices dropped US$90-95/ton over the past week while spot styrene prices dropped US$30/ton week over week, resulting in a cumulative drop of around US$50/ton in theoretical ABS production costs. Theoretical production costs based on spot styrene, butadiene and ACN feedstock costs suggest that spot ABS prices still have some room to move lower - current theoretical cost level stands more than US$100/ton below the prevailing import price range. Month over month, spot prices have plunged by US$800/ton for butadiene, by US$255-260/ton for ACN and by US$145/ton for styrene. Demand remains restricted as banks have tightened credit standards regarding the issuance of letters of credit with deferred payment terms, leaving many players struggling with cash flow issues. In Italy, sellers announced initial October ABS prices with significant decreases from late September deal levels in line with the market’s expectations. Poor demand and plunging feedstock costs were cited as the main reasons for the decline in ABS prices. October styrene contracts were settled with an average decrease of €79/ton from September while the October butadiene contract settled with a €300/ton reduction from September. In the ACN market, spot prices on a CIF Med basis tumbled US$65/ton over the past week after declining by US$60-75/ton during the previous week. A West European producer nominated ABS gentlemen’s agreements for October with decreases of €40-50/ton from September, saying that they announced a smaller decrease than the cumulative drop in feedstock costs due to reduced competition from import prices, which are not very competitive with local prices at the present. A South European producer announced their initial spot ABS prices for October with decreases of €70-80/ton from September, commenting that they reduced ABS prices by a larger extent than their PS prices given the massive drop in butadiene costs. ABS prices also moved lower in Turkey this week due to lower prices in other global markets as well as weaker demand. Local prices on an ex-warehouse Turkey basis lost US$60-100/ton over the past week as sellers offering at the upper end of the previous week’s range withdrew their offers in the face of poor buying interest. A distributor reported that buyers have become increasingly hesitant to purchase recently given generally sluggish polymer demand in the country as well as the recent appreciation of the US dollar against the Turkish lira, which has driven up the cost of raw materials for buyers. The Turkish market is still said to be facing downward pressure over the near term as weakening ABS prices in Asia have pushed down the theoretical costs of landed materials to the Turkish market.