Cost Recovery Fails to Lift Southeast Asia’s ABS Market as Chinese Offers Stay Aggressive

Asian ABS markets moved in different directions this week. Higher crude oil and monomer costs supported a slight improvement in China, while Southeast Asia remained largely stable as aggressively priced Chinese cargoes continued to pressure the market. Despite the firmer cost environment, strong competition from Chinese suppliers is changing regional trade dynamics and limiting sellers’ ability to raise prices.

In China, the lower end of the import ABS injection range increased by $10/ton, while domestic ex-warehouse prices, including VAT, rose more significantly by CNY300/ton ($44/ton). Domestic ABS prices remain around $180-200/ton below CIF China import levels, encouraging local suppliers to target export markets where their material can remain highly competitive.

The improvement in China did not extend to Southeast Asia. ABS prices in the region were broadly unchanged for the week ending August 14, with low-priced Chinese material preventing any meaningful upward movement. Chinese ABS cargoes were heard at $1,320-1,400/ton CIF Vietnam, cash, although the lowest offers were not included in the regional weekly assessment. FOB China offers were also reported at $1,310-1,380/ton, cash, putting significant pressure on traditional Northeast Asian suppliers.

Demand in Southeast Asia remained weak. A Vietnamese converter reported having sufficient inventory and preferred to wait before making fresh purchases, while end customers continued to buy only for immediate needs. Other market sources also noted that offers changed very little from the previous week, with buyers maintaining a cautious wait-and-see approach.

The growing availability of competitively priced Chinese material is also disrupting the traditional price relationship between China and Southeast Asia. Normally, ABS prices in Southeast Asia trade around $20-30/ton above CIF China levels to reflect freight and other costs. Recently, however, Chinese export offers have been heard below prevailing CIF China import prices and significantly below established Southeast Asian levels.

This reflects the strong export competitiveness of Chinese ABS suppliers. With domestic prices substantially lower than import parity, Chinese producers have more flexibility to offer aggressively overseas, making competition increasingly difficult for traditional Northeast Asian suppliers without major pressure on margins.

Meanwhile, upstream costs strengthened and provided some support to ABS production economics, although they were not enough to trigger a broader market recovery. October Brent crude settled at $87.07/bbl on Thursday, down $1.91/bbl on the day, but remained around 6% higher on a weekly basis. Prices were also trading near $88/bbl during Friday's intraday session, keeping the energy market volatile.

Key ABS feedstocks also moved higher. CFR China styrene increased by $10/ton, spot butadiene rebounded by $110/ton, and spot acrylonitrile rose by $10/ton from the previous week. Lower operating rates at Rongsheng Petrochemical provided some additional supply-side support, but weak seasonal demand continued to limit the market's upside.

For now, higher production costs are helping establish a firmer price floor rather than driving a major recovery. While China's ABS market has shown modest improvement, aggressive export offers from Chinese suppliers continue to cap prices in Southeast Asia, leaving the market under pressure despite stronger upstream costs.

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