Asian acrylonitrile-butadiene-styrene prices are falling rapidly this week as traders and dealers -- the middle men between buyers and producers -- slash prices on the back of tumbling feedstock and crude oil prices, market sources said.
Traders and dealers in Hong Kong -- a major trading hub for ABS in Asia -- have been heard offering at $1,940-1,960/mt within the Hong Kong market, while the lowest offers from producers are said to be around $1,950-1,970/mt CFR China.
In comparison, Platts assessed ABS at $2,035/mt CFR China last Wednesday.
A producer in Southeast Asia said the market had taken a turn for the worst over the last few days amid fast falling crude oil. "Many dealers are selling very low, liquidating their stock," the producer said.
The main cause of the bearish market sentiment is the relatively steep falls in feedstock butadiene over the last several weeks, and the more recent tumble in crude oil prices. But it also comes on the back of generally weak demand, as Chinese end-users, which depend heavily on exports, have seen demand for their products weaken due to macro-economic turmoil in Europe and the US.
On top of that the smaller end-users of ABS are having problems getting cash and loans due to tighter credit regulations in China.
"People are actually getting hurt -- there is a sense of desperation," a dealer in Hong Kong said, referring to end-users in southern China, some of whom were said to have gone bankrupt or closed down. She added that toy manufacturers were among the worst hit by the downturn in export demand.
Looking at feedstock prices, butadiene slumped by $999/mt, or 28.5%, in April, and on Friday was assessed at $2,501/mt CFR China.
ABS consists of about 15% butadiene.
And butadiene prices could keep falling further as China Petroleum & Chemical Corp., or Sinopec, slashed its ex-works butadiene prices in East China for a second time in May effective Tuesday, this time by nearly 7%, end-users said.
With the latest price cut, the state-run company's subsidiaries in the eastern provinces -- Sinopec Yangzi Petrochemical, Sinopec Shanghai Petrochemical and Zhenhai Refining & Chemical -- are offering butadiene at Yuan 20,000/mt, or about $2,666/mt on an import parity basis, down Yuan 1,500/mt, or about 7%, from Yuan 21,500/mt on Thursday.
June ICE Brent crude futures have fallen $7.14 since Wednesday -- when ABS was last assessed by Platts -- to $112.49/barrel at 0830 GMT Monday.
