The coming price shifts for the resin markets have been identified for the coming year. When it comes to ABS, polycarbonate, nylon 6 there has been some movement. As with any market - there are some key details behind the pricing movements.
Understanding the ABS Story
ABS; Acrylonitrile butadiene styrene, is a commonly used thermoplastic polymer with many manufacturing applications. Here are some details;
- 83% of ABS consumption happens in Asia, mostly in China
- Renewed demand in 2010 caused Asian producers to add 1.5 million metric tons. Because of this capacity many sellers were running around the world looking new places to sell. Today, however, demand has dropped off. This means capacity announcements are speculative. A new production plant is being built in Saudi Arabia, but won't start up for at least a year.
- Over the next few years, prices will be influenced by overcapacity.
ABS Regional pricing outlook: because domestic suppliers are willing to keep prices where they are to keep current business, forecasts for North American ABS prices come in just north of $2,000/mt; with European prices at barely below $2,000/mt; and the Northeast Asian price a little bit lower than the what the EU pays.
About Polycarbonate Markets
The polycarbonate market also has a similar Asia effect. The Middle East shares a market influence as well.
- In 2016 the biggest polycarbonate producers have been SABIC and Bayer
- Because capacity increases in 2011 and 2012 stayed ahead of global demand, oversupply caused falling margins. Those margins were about $200 per ton, far below what would pay back business investments. This means businesses had to 'right-size' over four years following 2012.
- Some believe there might be a buyer's market coming. As a buyer, the opportunity is to buy material that used to go to China, since the U.S. exports 30-40% of its poly there. Poly is a subsidized industry in Beijing, and through its last 5-year-plan, should receive increased investment.
Polycarbonate regional price outlook: holding on at a range above $3,000/mt for North America through the end of 2017. The European and Chinese prices should hold close together and remain well below this.
- For the fiber business — 66% of global consumption of fiber is nylon 6 fiber, and nylon 6,6 fiber
- This open, diverse industry has many players. China is where most of the nylon 6 producers and capacity remain.
- Because our global operating rate is falling, many plants in China are not really running. Because of this - the rate will be around 50% in 2017
- Chinese companies are not known for external focus — they do not really look for customers. Most of them are busy making only the base resin, and many U.S. buyers are not actually buying.
Nylon 6 regional price outlook: prices will go up next year in North America to $2,500 and $3000/mt, while EU and Asian prices hover around $2,000/mt, if they don't fall.
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