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Lackluster demand outweighs tightness in Asian ABS markets

by Merve Madakbaşı -
  • 28/07/2020 (08:12)
Asia’s import ABS markets have followed softening local prices in China after the uptrend faltered in early July when prices reached multi-month highs. Although fading support from demand has predominated the pricing trend more since last week, restricted supplies and high costs have kept the size of discounts small heading to August.

Imports tracked local offers softer in China

China’s local ABS market was mostly on a softening path during the past 4 weeks as buying appetite from manufacturers gradually thinned. “Most buyers have adequate inventories thanks to their intense replenishment activities back in June. Any further purchases would be tied to basic needs from now on,” said players.

Slightly lower local offers influenced the import market as well with suppliers issuing $10-20/ton price cuts in most cases last week. A source from a Northeast Asian producer reported to ChemOrbis, “We reduced our offers by $20-30/ton. Although supply across the board did not ease much and styrene prices hovered close to their prevailing highs, a lack of demand took the center stage.”

Players did not only blame buyers’ sufficient stocks but also the nearing off-season for certain ABS applications as the reason behind tepid activity.

To track weekly developments in China ABS market, please see China Weekly ABS Analysis (For members only)

To track weekly developments in SEA ABS market, please see SEA/India Weekly ABS Analysis (For members only)

High upstream offset the pressure to some extent

On the costs’ side, spot styrene prices lately stood at more than a 4-month high both on CFR China and FOB South Korea basis, data from ChemOrbis Price Wizard suggested. Spot butadiene prices have climbed 23% ($85/ton) in a month, as another supportive factor for the downstream ABS market.

Some players commented, “Spot ethylene prices seem to have stabilized at $800/ton CFR China after a correction back in the first week of July. Styrene and butadiene markets continued to support ABS sellers and kept discounts in check despite slowing activity.”

Offers on the high end face resistance in Southeast Asia

The sentiment in Southeast Asia was also affected by easing pricing policies in China. Import ABS injection offers were assessed $20/ton lower on the high ends of the market week over week.

A regional producer admitted, “Any prices at/above the $1400/ton CFR threshold do not see acceptance in the market. Yet, we do not expect dramatic price changes since supply has not found much relief.”

South Korea’s LG as well as Malaysia’s Toray conducted scheduled maintenance at their ABS units in July. The plants have production capacities of 850,000 tons/year and 350,000 tons/year, respectively.

Holidays weigh on demand outlook

China is readying to celebrate Ghost Month Holiday in mid-August which may keep activity subdued over the coming weeks. Additionally, players in Indonesia, Malaysia, Singapore and the Indian subcontinent will be leaving their desks to celebrate the Eid holidays next week which may weigh on demand in Southeast Asia further.
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