Asia ABS market under downward pressure amid long supply
Asia’s acrylonitrile-butadiene-styrene (ABS) market is under downward pressure amid rising inventory among traders and suppliers, but offers were still being pushed up due to elevated feedstock costs.
Slow offtakes post Lunar New Year holidays have taken some sellers by surprise as they anticipated a recovery in buying momentum in March.
Offers this week were at $1,580-1,670/tonne CFR (cost & freight) China, around $20/tonne higher than the previous week.
Other sellers have yet to make a quote but most participants expect a higher number.
With the key feedstock styrene monomer (SM) sector kicking off its turnraround season in March, supply of SM is expected to tighten in the second quarter, prompting downstream ABS makers to aim for higher resin values in a bid to maintain margins.
“SM supply is expected to tighten, so ABS suppliers have indicated higher quotations,” said a trader in China.
Meanwhile, the ongoing trade talks between the US and China make market players cautious despite some recent assurances from both sides that the negotiations are going well.
Most players in the ABS sector preferred to wait for concrete news of some resolution to the trade spat before making commitments. After all, tariffs have been proposed on made-in-China appliances, which has a large component of ABS material.
“The outlook for trade is unclear due to the US-China trade war,” a Taiwan-based producer said.
ABS resins are used for appliances, toys, consumer electronics as well as the automotive and construction sectors.
Meanwhile, new economic stimulus measures announced by the Chinese government appeared to have cheered the market.
China's value added tax (VAT) for the manufacturing sector is set to drop to 13% from 16% currently, as the government pegged its growth rate for 2019 at 6.0- 6.5%, down from last year's actual GDP growth of 6.6%.