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PS, ABS markets take respite from rising streak in China, SEA

by Manolya Tufan - mtufan@chemorbis.com
  • 21/09/2020 (04:07)
The firming trend has faltered in Asian PS and ABS markets as demand subsided in China after six straight weeks of price hikes. Although ongoing tightness and supportive costs provided a buffer against faltering demand, buyers’ resistance came to the fore in determining the price direction last week.

Import PS, ABS prices corrected on waning demand

Import ABS prices in China and Southeast Asia had been tracking a bullish trend since late July to hit multi-year highs. However, prices on CIF China/SEA basis have retreated from their highest levels since October 2018, the weekly average data from ChemOrbis Price Index showed. PS prices have also slipped from a year-high in China and a 6-month high in Southeast Asia.

Several suppliers in the region had to apply discounts on their offers to China as buyers moved to the sidelines after completing restocking activities in the past couple of months. “Fiscal stimulus measures and a strong recovery from the pandemic created a demand boom in China during the past few months. The appreciation of CNY also rendered import prices competitive, encouraging restocking activities,” a seller remarked.

Resistance building up on reimposed lockdowns in SEA

Firming trend in China was supported by a robust buying appetite, while it slowed down last week following several weeks of restocking activities. In the meantime, Southeast Asian markets have been witnessing a relatively faint buying interest amid visible price hikes both for PS and ABS and reimposed lockdowns in some countries.

Plus, the economic recovery in the region has lagged behind China. Renewed quarantines after the fresh emergence of outbreaks may impede recovery further.

A player reported, “Producers have implemented several consecutive increases over the past weeks in China, while they have faced a protracted struggle with their buyers in Southeast Asia before their hike attempts found acceptance. Deals remained few and far between amid growing cautiousness.”

Supplies still tight

On the other hand, overall ABS and PS supplies remained tight in the region. With a lack of spot availability, Asian suppliers mostly trimmed export quotas particularly to the markets offering poor netbacks.

Uptrend in feeds remains intact

Volatility in the energy markets also weighed on the sentiment. However, ABS and PS feedstocks shrugged off volatility in crude oil prices. According to ChemOrbis Price Wizard, spot styrene prices both on CFR China and FOB South Korea basis sustained their rising trend to hit $690/ton and $670/ton, respectively last week. Spot butadiene and ACN prices on CFR China basis also increased further by $60-65/ton on a weekly average.

High upstream costs offset the pressure from fading buying interest to some extent.

Holidays dim demand outlook

In China, players, who covered their requirements, prepare to leave their desks for National Day holidays in early October, which serves to slow down demand. Thus, prices are believed to have further room to go down particularly if volatile energy markets put pressure on monomer prices.

Meanwhile, Southeast Asian players are wary of diverted cargos from the neighboring Chinese market amid holidays.

Although fading support from demand is expected to pull prices further down, restricted supplies and high costs may keep the size of discounts small heading to October.
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