Continued plunging upstream costs take tolls on Southeast Asian ABS market

Southeast Asian players are expecting import ABS offers from Fareast Asian suppliers to breach below the $1700/ton threshold in the coming days considering the deep plunge in the upstream styrene monomer (SM) and butadiene market.

Data from CommoPlast suggests a reduction of more than $280/ton in SM costs since 2 October to $1107/ton FOB South Korea on the 2 November. Meanwhile, butadiene shredded $290/ton within the same period to 1045/ton with the same term. Weak demand is the primary factor pressuring SM and butadiene prices lower, sources said.  

Compared to the beginning of October, import ABS from Fareast Asia region to Southeast Asia has dropped approximately $100/ton on an average to $1710-1780/ton CIF, LC AS. “At the current state of demand, we think ABS offers shall go back to the $1600s/ton levels. We have restricted replenishment over the past couple of weeks,” a Vietnamese buyer informed.

ABS resins are used in the production of household and electronic appliances, toys and automotive sectors. The escalated trade war between China and the USA is affecting demand for these items visibly, sources said and many companies in these sectors are relocating or diversifying productions out of China to avoid the direct hit by the trade issues.

In the meantime, both butadiene and SM are at the lowest levels this year, prompting expectation that the market has hit the bottom. “Demand for SM is not all bad and therefore, we think there shall be a rebound in the near term,” a market source said. 

Players in the ABS sector are watching out for further development in the upstream market before making any decision. “We are more conservative now. Theoretically, ABS prices shall drop further at the current costs,” a Vietnamese buyer purchased South Korean cargoes at $1710/ton CIF, added.