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ABS markets see cost driven hike requests from Asia

  • 01/07/2016 (08:44)
Heading to July, Asian ABS producers issued higher import prices to major markets including China, Southeast Asia, Turkey and Egypt. Hike requests were justified with rising feedstock costs amidst fluctuating energy markets as crude oil prices erased their previous losses later this week with fading impact of Brexit vote on Asian polymer markets. Concerns about possible output reductions from China ahead of G20 Summit in September also provided support for the trend. However, demand mostly remained muted in those markets and higher ABS prices were yet to see acceptance.

In China, a Taiwanese producer increased their ABS offers by $30/ton amidst a market talk about generally low stock levels at regional sources. “Although there is not much demand from manufacturers’ side, mostly traders are replenishing their stocks due to a possibility of supply limitations ahead of the G20 Summit,” some traders highlighted.

In Southeast Asia, three Taiwanese producers started to seek $20-30/ton increases. Players commented that although purchasing activity remained on needs-basis as ABS buyers refrained from building up inventories, possible supply cuts in China combined with higher upstream costs supported the market. A Taiwanese producer confirmed, “Demand demonstrated no major change following our hikes, whereas we don’t think ABS prices are under pressure for now.”

In Turkey, South Korean ABS producers announced their new July prices with increases of $50-100/ton in line with rising Asian ABS markets on the back of higher spot butadiene and ACN costs in the region. Some traders who received fresh prices said, “We are going to negotiate with our suppliers to obtain some discounts. We are not willing to replace large quantities since we already have some material on hand. Moreover, we are not confident about demand outlook.” A distributor predicted, “Hikes of $40-50/ton may pass on July ABS deals but larger increases are not likely to materialize.”

A Taiwanese ABS maker unveiled their new July prices with $35/ton increases towards the end of this week. “We are not planning to replace material at the moment as we have some on hand. We plan to wait until after Ramadan when we hope to see a demand pick-up,” a trader who received new prices from the supplier said.

Similarly, import ABS prices shifted direction and gained some ground in Egypt recently despite persistently sluggish demand. Firmer costs coupled with supply concerns stemming from potential plant shutdowns in China encouraged regional sellers to raise their offers and pushed the overall import range $40/ton higher. However, Egyptian buyers who were still reluctant to secure any extra stocks amidst the lull of Ramadan were lukewarm in response to firmer stances from sellers.

Taiwanese sellers blamed firmer feedstock costs as the reason behind their decisions while they also underlined that supplies might diminish in August due to possible plant shutdowns in China given the G20 summit. A distributor confirmed increases of around $40/ton from a Taiwanese ABS supplier. “We were surprised by the recent upward movement as demand remains sluggish,” he noted.

In upstream markets, spot styrene costs soared by $30/ton on FOB South Korea basis week over week, while butadiene prices surged by $45/ton with the same terms. ACN prices, meanwhile, suggested an increase of $20/ton on CFR Far East Asia basis since the beginning of June.
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