Asia’s acrylonitrile-butadiene-styrene (ABS) market weakened on concerns over softening demand amid an escalation of the US-China trade war.
Demand for the material in the key China market is expected to be hit after the US announced imminent imposition of tariffs on a broad spectrum of Chinese goods, after talks between the two economic giants appeared to have stalled.
Spot prices of ABS fell below $1,500/tonne CFR (cost & freight) China for some brands, while others traded in the mid-$1,500/tonne CFR China levels.
Prices last week were in the low-to-high $1,500/tonne CFR levels, ICIS data showed.
“Customers were not interested to place orders,” said Taiwan-based producer, as buyers anticipate further price slippages in the near term.
ABS is the largest volume engineering thermoplastic resin, which is used in automobiles, electronics, appliances and recreational products.
Tariffs have been proposed for made-in-China appliances and with the threat of imminent imposition, sentiment has been hit among Chinese participants.
“Demand was already rather weak and now with sentiment further hit by the trade war escalation, ABS is under downward pressure,” said a trader in China.
Buyers of ABS are expected to delay commitments and keep to the sidelines, until some clarity emerges from the US-China trade talks.
High-level negotiations will be held later this week in Washington, ahead of the US’ planned tariff hike to 25% on $200bn worth of Chinese imports on 10 May.
With resin prices on the decline, margins among producers continued to shrink. Key feedstock styrene monomer (SM) remained largely stable while acrylonitrile (ACN) values remained on an uptrend.
Some producers lamented the declining profitability of ABS with margins increasingly squeezed. After a decent first quarter, margins started to deteriorate in the second quarter as demand for resins were below expectations.
Typically, manufacturing activities will pick up in the second quarter after a slower first.
However, users of resins remained mostly cautious, dampening demand for many plastics, including ABS. - Source: ICIS-