Published On: Thu, Jul 11th, 2013

ABS loses premium over HIPS in Asia, Mediterranean

Although ABS prices traditionally carry a premium over HIPS, they have come down recently in major spot markets including China, Southeast Asia and Turkey as per the pricing service of ChemOrbis. ABS prices are currently trading at par with HIPS in China while Southeast Asia and Turkey are seeing ABS prices standing below the prevailing HIPS range.

ABS loses premium over HIPS in Asia, Mediterranean

ABS loses premium over HIPS in Asia, Mediterranean

When looking at China, plunging butadiene costs drove import ABS prices down in the past few weeks. Similarly, lack of demand caused import HIPS prices to lose ground despite crude oil prices moving above the $100/bbl threshold. Current import prices for both products are now almost at the same level in China with ABS prices standing only $10/ton above HIPS. However, the premium between these two products was as large as $50-90/ton six months ago.

In Southeast Asia, both ABS and HIPS prices have been on a soft note recently in the import market owing to similar reasons as in China. However, current ABS prices are standing below HIPS in the region with a $10/ton discount. Indeed, HIPS prices matched the prevailing market level for ABS around mid-May and have stood slightly above ABS since then. As it was the case in China, ABS prices were carrying a premium as large as $50-90/ton in February.

A trader in Taiwan, who offers stable offers to Vietnam from last week, said, “ABS prices are now cheaper than HIPS. While upstream costs continue to go down, we cannot raise our prices and gain the premium over HIPS back.” Other players also underscored that buyers may switch to ABS for their applications rather than paying higher prices for HIPS.

According to ChemOrbis, a similar situation is in place in Turkey, where current HIPS prices are matching the prevailing market level for ABS in the import market. In some cases, some HIPS prices have even stood above the ABS market recently, although ABS carried a traditional premium of around $70-100/ton only a couple of months ago. A trader pointed to the narrowing gap between the two products, reporting poor sales for both products.