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Uptrend in Asian ABS markets takes a pause despite tightness, styrene

by Manolya Tufan -
  • 02/11/2020 (04:02)
Import ABS markets took a pause from the bullish trend that was stretching as far back as early April in China and May in Southeast Asia. Although the bullish tone fueled by ongoing tightness and higher styrene prices remained intact, suppliers have elected to keep their offers flat after applying hefty increases in the past weeks.

As can be seen in the graph below, import markets stabilized at around 2-year highs.

Imports flat, locals yield to waning demand in China

Most buyers in China moved to the sidelines last week after having covered their requirements. Extreme tightness and high prices even prompted some buyers to substitute some applications with HIPS in the past weeks.

A player reported, “Asian ABS markets were stuck between the ongoing regional tightness and fading buying appetite in response to spiking prices. Transacted volumes were negligible particularly in Southeast Asia.”

Import prices remained flat in China last week, while local ABS prices took a breather as sellers trimmed their offers slightly to stimulate demand. Buyers were taking a less active part in the market compared to the past weeks.

Local prices hit their highest levels since June 2018 before they eased off slightly last week, ChemOrbis data showed.

SEA’s import ABS mirrors stability in China

Southeast Asian markets remained flat week over week as buyers were already resisting multi-year high prices. A source from a regional producer affirmed, “Escalating prices deter potential buyers. We kept our offers flat as it is hard to sell at the prevailing levels.”

Still, players do not expect prices to fall all of a sudden as ABS shortage may continue to offset tepid demand.

No signs of immediate supply relief

Operations at a major Chinese producer’s ABS plant have reportedly been resumed, which may bring some relief to the regional supply levels. Yet, there are no signs of immediate relief in supply levels. Overall availability in the spot ABS markets is likely to remain limited thanks to earlier bulky sales.

Styrene highest since January, butadiene at a year-high

Apart from the supply side, the ABS market remains under the upward pressure of rising feedstock prices.

According to ChemOrbis Price Wizard, spot styrene prices on FOB Korea/CFR China basis have jumped by around 33% since late September to reach their highest levels since January 2020.

Data also showed that spot butadiene prices on CFR China basis have risen since May to hit a one-year high recently.

Players at odds about near-term expectations

Most participants rule out abrupt drops for the near term. According to them, the ABS market may resume increases in tandem with tightness and firmer feedstock costs. Yet, demand in China is waning, which could stall prices from spiking too high. The impact of lower crude oil futures on feedstock prices will also be closely tracked.
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