ABS market balanced between firm costs and slow demand in SE Asia

Trading activities in the ABS market of Southeast Asia are subdued by the National Day holidays in China this week. However, the overall price range is not suggesting major changes as the market is currently balanced between slack demand and firmer upstream costs, according to ChemOrbis. Although crude on the Nymex declined by 1.7% during last week, feedstock costs have moved upward over the past week due to pre-buying activities from China ahead of the holiday. Spot styrene prices on FOB South Korea basis are slightly firmer on the week while spot butadiene prices on an FOB South Korea basis have surged by almost US$200/ton to hit a six month high at the end of last week. A South Korean producer left ABS prices to the region unchanged this week. A source from the producer commented, “We are projecting stable ABS prices in the short term as producers still need to recover their margins. In addition, spot styrene and butadiene prices have not dropped much despite softer energy markets. Although we are not optimistic about the outlook in the fourth quarter as we expect demand to remain slow, prices are unlikely to soften in the short term unless the global trend changes direction.” Another South Korean producer rolled over ABS prices from last week. A producer source reported, “We are not planning to make further adjustments unless demand improves. Although buyers are still showing resistance to our prices, our margins remain poor. We do not think that prices will soften further as upstream costs are still high and demand is expected to improve after Chinese players return back from the National Day holiday.” Despite firmer upstream costs, the sentiment is not strong on the buyers’ side as many converters are complaining about their thin end product businesses, with some even voicing their expectations of seeing price relief in the upcoming days. A converter based in Indonesia commented, “Demand has lost speed this month due to a stronger US dollar against the Indonesian rupiah. We have suspended our end product sales for now as we cannot reflect higher costs to our prices.” According to ChemOrbis, in Vietnam, another converter reported, “Our end product demand performed well in July and August but it was slower this month as we were forced to raise our end product prices due to higher costs.” A different converter added, “Our end product demand is quite slow, but we are projecting higher ABS prices in October given firmer upstream costs, including ACN while supply is sufficient in Vietnam these days.”