Import ABS Rises Along With Firming Styrene Costs12 Jan 2011 • by Natalie Aster
In China, import sellers elected to lift their ABS offers by $20-30/ton last week, citing soaring styrene costs as the main reason for the upward movement in prices. Sellers complained that they are continuing to struggle with poor demand these days as buyers remain resistant to the new offer levels.
Import ABS prices were reported at $2230-2290/ton CFR China, cash. The price level observed a $20/ton gain on the high end and a $10/ton increase on the low end on a week over week basis. Producers lifted their offers by around $20-30/ton on the back of persistently high upstream costs as well as relatively limited supplies. Producers predicted that strong oil prices would continue to support a firm ABS trend while also pushing up sales volumes over the short term. In contrast to producers’ optimism, traders complained that they found it hard to sell at the new price level as demand has not picked up recently. Therefore, traders generally implemented smaller price increases than producers over the past week while commenting that they believe that the potential for another jump in import ABS over the near term is limited. On the re-exporters side, most buyers reported that they have not made any adjustments in their purchasing strategies recently although they acknowledged that import ABS prices are currently tracking a firm trend.
Inside China, offers were tracked a stable to firm trend last week as sellers offering at the low end of the overall range elected to lift their offers by around CNY200/ton while producers offering at the higher end of the range also reported that their sales prices have moved up by a similar amount. Sellers attributed rising ABS prices to firming styrene feedstock costs. The operating rate of most producers was maintained at around 80% with producers expressing no plans to alter their rates over the short term.
Chinese ABS prices were reported at CNY17150-18600/ton on FD basis, cash including VAT, $2211-2398/ton without VAT. The price range witnessed a CNY400/ton increase on the high end and a CNY200/ton gain on the low end week over week.
Foreign origin ABS prices were in the range of CNY18200-18800/ton on FD basis, cash including VAT and duty, $2347-2424/ton without VAT. The high end moved up CNY100/ton while the low end jumped CNY400/ton when compared with the past week.
In feedstock news, spot butadiene prices were unchanged from the period before the holidays at around $2070/ton CFR China as both and buyers and sellers remain cautious about taking positions. In the ACN market, spot prices gained $20/ton to reach $2290/ton CFR Far East Asia as news that a major American producer will delay its expected return to the market exacerbated an ongoing tight supply situation. In styrene news, the spot market started last week on a firm note but retreated at the end of the week due to falling stock markets in Asia as well as lower energy prices. On FOB Korea basis, following an early week deal for February shipment materials at $1410/ton, up by $70/ton week over week, a February offer was heard at $1400/ton. On CFR China basis, traders were planning to sell for February at $1420/ton, up by $65/ton week over week, but did not see much demand due to rising supplies and the slowdown ahead of the Chinese New Year. Inside China, styrene prices were up by CNY200/ton ($30/ton) to reach CNY10550-10600/ton ex-tank Zhangjiagang, cash inc VAT ($1360-1367/ton without VAT).
Looking ahead, ABS offers are expected to remain at high levels over the near term in both the local market and the import market, although slower seasonal demand will help to limit the extent of the price increases.
In Europe, with significant increases occurring in the upstream markets, ABS producers started to pronounce three digit increase targets at €120-130/ton for January contracts although the actual negotiations are to start next week since the region has not shrugged off the holiday lull, yet.
In feedstock news, spot ACN prices were reported at $2255-2260/ton on CIF MED basis, indicating $45/ton increases on the back of the higher propylene costs although most buyers are yet to return to their desks following the long holidays. Apart from the feedstock costs, still steady fiber demand and the high cotton prices are amongst the other factors that support the ACN market. Looking at the butadiene market, offer levels gained €75/ton at €1460-14770/ton on FD NWE basis. Overall demand is still reported to be healthy in the region. Looking at styrene, January styrene contracts were settled at different levels within the range of €1189-1215/ton FD NWE, posting increases of €118-130/ton from the December level. Due to firm benzene and crude oil prices, the spot market also rebounded, with a January spot offer being reported at $1350/ton FOB NWE, up by $15/ton compared to the previous week’s latest spot styrene offer.
In the US, spot ABS prices were reported at $2535-2580/ton on delivered railcar basis, retaining their firm levels because of good demand. Nevertheless, producers are still acting cautiously in the market as they avoid building inventories since they fear that prices might record swift decreases if demand slows down. For now, they continue to be supported by the higher upstream costs for the time being.
In feedstock news, spot ACN prices were pegged at $2195-2205/ton on FOB USG basis, representing $40/ton increases on the back of tight supplies and healthy global demand. Meanwhile, in the butadiene market, spot prices were pegged at $2105-2127/ton on CIF USG basis, up by around $65/ton while the January contract settled at $2006-2028/ton with $110-132/ton increases from December. These increases continue to be supported by tight supplies. In the styrene market, following a couple of early week spot deals at stable levels week over week at $1322-1333/ton FOB USG, spot styrene sellers raised their offers by around $44-56/ton to $1366-1389/ton with the same terms. The jump in prices was attributed to tight availability across the country.