Trading activity slowing down in ABS market in China

Players reported that trading activity has been slowing down in China’s ABS market recently, prompting some sellers to offer discounts to speed up sales, as per Chemorbis. Many producers, however, are said to be standing firm on their prices, commenting that they would rather reduce operating rates than cut their prices as they cannot afford to agree to any major reductions as production costs are rising. Import ABS offers in the Chinese market were stable at the upper end of the range this week while prices dipped US$20/ton on the lower end of the range on a week over week basis. A similar trend was observed in the domestic market, where the low end of the overall price range shed CNY300/ton (US$45/ton) while the upper end of the range remained unchanged over the past week. Traders and distributors were generally more willing to concede to price reductions than producers, with several traders reporting that they are prepared to sacrifice margins in order to pare down their stock levels while adding that they are not reducing their purchase volumes from producers as they are not very optimistic about the demand outlook for the coming month. On the buyers’ side, converters said that they are trying to delay their purchases for as long as possible in anticipation of seeing some relief on prices over the near term. ABS prices are anticipated to be due for a correction following several consecutive weeks of rising prices that have pushed import offers on CFR China basis to levels US$80-90/ton higher than levels seen at the beginning of the month. Producers have so far proven mostly unwilling to lower their prices, given their rising production costs. Spot ACN prices jumped US$70-75/ton over the past week in Asia in response to persistently limited supplies, with players adding that spot ACN prices are likely to remain on an upward trend into the first months of the new year. In the styrene market, offers for spot cargoes on an FOB Korea basis were reported mostly unchanged over the past week, with sources commenting that the market is finding support from healthy demand in other Asian countries in spite of discouraging demand from the Chinese market. Spot butadiene prices retreated by around US$10/ton over the past week due to sufficient supplies inside China, although some players reported that supplies could begin to decline in China over the near term as cracker operators are coming under pressure to increase diesel fuel production to counteract the current diesel shortage inside China.
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