China ABS PD
Will ABS sellers be able to sustain price hikes?
In China, some ABS sellers in both local and import markets were reported to be seeking price hikes over the past week in line with firming styrene feedstocks costs. Import prices were reported stable to firmer at $1100/ton on a CFR China/Hong Kong, cash equivalent basis, while local prices were reported to have increase around CNY100-200/ton ($15-31/ton) from a week earlier. “Local prices increased around CNY100-200/ton. However, demand remains weak. Sellers are open to negotiations in order to conclude deals,” commented a trader. A source from a local producer also said, “We lifted our domestic PS and ABS offers by CNY100/ton ($15/ton) due to our limited supplies and rising styrene prices. However, demand is still muted as buyers are limiting their purchases to their immediate needs ahead of the approaching holidays. We believe that buyers will return to the market only after the Chinese New Year holidays. We are now operating our PS plant at 50% of capacity and our ABS plant at 90% of capacity.” A trader also commented that through their hike attempts, sellers are trying to prevent any further losses on deals as they are currently selling at a loss in the face of the recent increases in spot styrene costs. Given the prevailing spot styrene, butadiene and ACN prices, theoretical cost calculations suggest that current ABS prices are standing below the breakeven point.
ABS prices are expected to be shaped by developments in spot styrene prices over the short term, with prices currently being reported around $910/ton FOB Korea. Players report that buyers are likely to show resistance due to multi year low oil prices and China’s cloudy economic outlook. In feedstock markets, spot ACN prices fell by $30/ton week over week to $1110/ton CFR China while spot butadiene prices rose by $10/ton to $765/ton with the same terms.