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Asian ABS premium to HIPS widens fourfold on year in Jan-Sep on SM

The premium of acrylonitrile-butadiene-styrene to competing co-polymer high-impact polystyrene has widened by more than fourfold so far in 2014 compared with a year earlier on falling styrene monomer prices, Platts data shows.

The premium was last assessed at $205/mt on September 24, with HIPS up $5/mt to $1,705/mt CFR China and ABS stable at $1,910/mt CFR China.

The price gap between the two SM derivatives, which can have overlapping uses especially in the electronics sector, was only $33.80/mt in 2013, but that has widened to $143.70/mt for the first nine months of this year.

In 2013 the spread even briefly flipped to a discount for ABS on a couple of occasions, while in 2014 the premium has recently hovered above $200/mt.

Market sources in the Asian ABS and polystyrene markets said the price spread was crunched in 2013 due to the high SM prices at the time.

Since HIPS consists of more than 90% SM, while ABS consists of roughly 60% SM, the high cost of the feedstock had a larger impact on HIPS than on ABS, which also contains acrylonitrile (25%) and butadiene (15%).

However, this year SM prices have fallen, especially in the second half of the year due to poor demand from end-users such as expandable polystyrene, thereby reducing the feedstock cost for HIPS producers.

The widening premium for ABS could result in lower demand as HIPS prices become more competitive, market sources said, but they also added that no big shift towards more use of HIPS had yet been seen among end-users in Asia.


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