The pace of gains in Asian ABS markets accelerated over the last week after the uptrend kicked off as of early August. Short supplies, robust demand in China and supportive costs pushed prices to new highs. Meanwhile, fiscal stimulus measures also played a role in bolstering demand in China.

Market players noted that gains for ABS outpaced that of PS due to the extreme tightness in the region, on a side note.

Butadiene hovers around 5-month high

Butadiene gains have also reinforced the firming in ABS prices. According to ChemOrbis Price Wizard, spot butadiene prices on CFR China basis hovered around $575/ton last week after soaring by 55% since late June.

Spot ACN prices on CFR China basis also rose by $80/ton since around mid-July to reach $1030/ton.

No impact from lower styrene

On the other side of the coin, the downtrend in the spot styrene markets entered its fourth week. Prices on CFR China basis fell to $640/ton, while prices on FOB Korea basis also dropped to $615/ton, according to ChemOrbis data. Both stand at their lowest levels since May 2020.

This had little impact on the ABS prices so far amid other bullish factors.

Import ABS in China hits almost 2-year high

ABS markets reversed the course as of early August amid regional tightness as well as strong restocking activities in China after buyers’ inventories almost dried up.

Successive hikes pushed the weekly average of prices in China to its highest level since October 2018, according to data from ChemOrbis Price Index.

Data also reveal that prices in Southeast Asia reached their highest levels since May 2019 on a weekly average. Moreover, the ABS market in Southeast Asia is trading at a discount to China since around mid-April despite the premium it should carry over China under balanced market conditions.



Chinese demand performs better than SEA

Players reported stronger buying interest in China, boosted by China’s fiscal stimulus measures. A number of infrastructure and construction development projects for 2020 supported the demand scene in the country. Demand has been also strong in the home appliances and toy sectors in China.

Meanwhile, the firming trend in Southeast Asia has lagged behind China as demand remained flat, with buyers sticking to the sidelines following steep hikes. A distributor in Vietnam remarked, “Most of the players prefer to wait now that local demand is weak amid the Ghost month and rising COVID-19 cases.”

Sellers test slightly above $1700/ton CIF China level

Encouraged by stronger demand in China, suppliers decided to test prices at or slightly above the $1700/ton CIF level. The overall range for import ABS injection prices jumped by $100-150/ton from the previous week to be assessed at $1600-1720/ton CIF China cash basis.

Meanwhile, the overall import ABS range in Southeast Asia also rose by $80-100/ton on the week to $1530-1650/ton CIF, cash.

Export markets see prices surge from Asia

Most Asian suppliers applied visible increases on their prices to their own local markets and export outlets. Players in export outlets continued to complain of a dearth of spot ABS.

“Producers have no extra allocations and they barely meet contractual commitments.
Nearly all producers are sold out for August shipments,” a major market participant said.

A trader in China reported that a Taiwanese producer applied $90/ton increases for ABS, while adding, “Our supplier provided only 30% of its normal ABS allocation.”

Turkey’s import ABS market also had its share of sharp increases for Asian ABS cargoes as one South Korean supplier offered September cargoes with three-digit increases. South Korean ABS natural inj. offers were assessed $80/ton higher at $1480-1500/ton CIF Turkey, cash no duty.

Confirming tightness-driven hikes, a trader said, “A regional supplier reported being sold out for September-October. The two other producers also won’t have much availability.”

Will buyers’ resistance restrict further gains?

Players are questioning if the uptrend in ABS prices will slow down in the following days.

Some downstream buyers particularly in Southeast Asia lamented that they are unable to pass successive increases on to their end products.

A trader affirmed this by saying, “It will take some time to digest recent hikes as sharp ABS hikes led to resistance on the buyers’ side. Still, the ABS trend is likely to remain firm, supported by tight supplies and firmer costs.”

Source : Chemorbis