Asian ABS sellers renew confidence in shadow of volatile styrene
Price hikes from Taiwan, South Korea
South Korean and Taiwanese producers applied modest hikes of around $10-30/ton on their ABS offers to China and Southeast Asia last week, citing the improved sentiment.
According to data from ChemOrbis Price Index, the weekly averages of ABS prices on CFR China/SEA basis witnessed increases last week for the first time since they hit a four-month high by mid-March.
Support from crude oil rally
Players commented that the sentiment in Asian ABS markets picked up on the back of strong crude oil futures and naphtha prices, both reaching a more than five-month high last week.
“ABS sellers approached the market with price hikes thanks to support from the crude oil rally. Despite volatile styrene; strong energy costs have helped buying sentiment improve to some extent,” a trader in Hong Kong said.
ACN soars to multi-month high
Spot ACN prices on CFR China basis have been mostly tracking a firm path since late February amid globally tight supplies, traders reported. Spot prices have recently reached their highest level since November.
Other factors that contribute to hike attempts
According to some traders in China, market sentiment has been also supported by optimism over a potential US-China trade deal. “The positive progress in the trade talks has given the sentiment a boost,” noted a seller.
Meanwhile, the VAT cut for China’s manufacturing sector has also had a limited effect on demand so far. A trader said, “We were expecting the reduction in value added tax to boost demand at the start of the second quarter. It has still been able to make an impact, albeit limited.”
Fluctuating styrene spoils the mood
Despite all the above-mentioned factors, the ongoing volatility in Asia’s styrene market cast a shadow over sellers’ efforts to push ABS prices higher as it might be a deal-breaker in their negotiations with buyers.
“Styrene continues to fluctuate as high supply levels in China weigh on prices while strong crude oil futures prop up the market. The explosion at Formosa’s Mailao cracker has had a limited impact on prices as it didn’t affect the producer’s styrene plant. This volatility could jeopardize the sustainability of the recent hike attempts in the ABS market,” a regional trader opined.
Spot styrene prices in Asia have been tracking a volatile trend for more than one month now. The market saw a strong rebound two weeks ago, yet failed to sustain it last week and posted some declines.
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