US and Asian ABS Market Steps Back in H1 October 2023 Amidst Demand Concerns

The Acrylonitrile Butadiene Styrene (ABS) prices have tumbled in the second week of October 2023 due to subdued downstream demand momentum and low production costs in the North American and APAC regional markets. The waning international offtakes in the ABS industry exerted downward pressure in the H1 of the month. Moreover, inadequate recovery in the economic conditions of the APAC region pulled the demand fundamentals southward side, pausing the rise in the ABS price Trajectory this week.

In the USA, the ABS prices were negative, and the high supplies and steady demand from the automotive industry prompted this decline. From the upstream perspective, the relatively lower feedstock Styrene price trend significantly supported the recent change in the ABS prices. Meanwhile, the sluggish demand from the offshore market also put downward pressure on the ABS price momentum as the procurement activities have deteriorated because of the weakening of the economy, and consumers opted to wait and see attitude to enjoy more price decline. In addition, uncertainty related to future orders in the downstream automotive industry amidst high output costs and volatile crude oil values remained one of the persistent factors behind the decline of ABS costs in the North American region since Q3.

In China and Southeast Asia, the previously upward-trending ABS market has taken a bearish turn this week. This shift in the commodity market in the region resulted from the confluence of factors, including decreasing production costs and persistently weak demand, indicating the likelihood of further declines in the near term. The market participants continued to face pressure due to the absence of demand, as the buyers either made minimal necessary purchases or adopted a cautious "wait-and-see" approach in anticipation of further price drops. The weakened demand in the downstream industries has been linked to underperforming businesses and global economic uncertainties. Moreover, the absence of Chinese participants during the National Day holiday also contributed to the quiet market sentiments in the H1 of the month.

As per ChemAnalyst, the ABS price trend in the Q4 of the year is likely to revive marginally amidst improvement in the downstream automotive industry demand and tight supplies with the rise in the upstream WTI crude oil values globally as a result of delayed production rates amid the impact of Hamas-Israel War. Moreover, an elevation in the feedstock styrene and Butadiene costs will likely put northward pressure on the ABS manufacturers across the APAC regional market.