Tepid Demand Keeps the ABS Price Surge Under Check in Asia

The Asian ABS (Acrylonitrile Butadiene Styrene) market has shown marginal yet positive momentum during the second half of May 2024, driven by soaring container freight rates amidst an acute shortage of container space availability. Additionally, production has been ramped up due to earlier improvements in profitability for aggregation enterprises. Recently, the average operating rate of ABS manufacturing companies has continued to rise, leading to a simultaneous increase in production and a corresponding rise in the on-site supply of goods. However, the demand in the downstream home appliance and automotive industries remains insufficient to drive up prices in the regional market.

The ABS price trend in the Chinese market continued stability with a minor rise of 0.6%  in the third week of May 2024 as the feedstock Styrene market has recently stopped its decline and started to rebound further impacting the ABS price trend significantly. Although downstream automotive market demand remains primarily on the need basis for the time being. Meanwhile, the anticipated supply reduction could influence ABS pricing dynamics in the upcoming weeks. Demand improvement in the future is still expected in the home appliance industry, but the support from the supply side for ABS spot prices is gradually weakening in the face of lowered upstream material Butadiene prices during this timeframe.

Furthermore, the recent surge in shipping freight rates, driven by sustained capacity demand, blank sailing programs, and the Red Sea crisis, has boosted sellers of imported ABS. In response, the producers have applied fresh hikes to ABS pricing for China, citing the sharp rise in freight rates. ABS market players increased offers as the shipping costs have risen sharply. Moreover, the ABS prices are likely to hold at current levels in the near to medium term as the downstream factories are mostly maintaining purchases tied to basic needs, showing low enthusiasm for procurements. The consumer demand in the Asian automotive market is limited, resulting in an overall sluggish state of demand in the ABS market.

As per ChemAnalyst, the ABS price trend is expected to remain relatively stable in the Asian market during the coming weeks amidst moderate downstream demand and limited supplies in the face of increased freight costs. Some importers might be looking to build a safety buffer of inventory in case of delays or disruptions to supply chains. However, current disruptions have also led to containers being slow to return to Asia, creating an additional bottleneck in the commodity market.