Buyers of acrylonitrile-butadiene-styrene (ABS) plastic are finding supplies plentiful but increasingly expensive, a result of the costlier and scarcer feedstocks. While the zooming cost of crude oil is most responsible for the difficult feedstock situation, other causes are at work, including shifting petrochemical process economics, and a booming market for chemical fertilizers. Meanwhile, demand for ABS in the U.S. is notably weaker than last year, as its usual markets such as automotive, construction and durable goods have cooled off significantly.

ABS prices have been going through the roof most of this year, with producers blaming poor feedstock economics. But industry observers say the departure of Dow Chemical early this year from all non-automotive ABS markets in the Americas resulted in less competition and allowed the remaining players in the region to press more vigorously for price increases. Some ABS producers have announced price increases as high as 25¢/lb, whereas in years past prices usually varied no more than a few cents in either direction.

Feedstocks for ABS are now "at or near their historic highs," says Peter Feng, director of styrenics at Chemical Market Associates Inc. (CMAI) in Houston. At current feedstock rates, he adds, ABS manufacturers are "not making any money," which has sparked "great determination" by them to obtain higher prices from their customers.

Looking at the individual feedstocks for ABS, Feng says that styrene has been forced up in price by "some pretty substantial increments" in costs of its two ingredients, benzene and ethylene. As for acrylonitrile, the heftier price tag for that commodity is due to run-ups in its two ingredients, propylene and ammonia. Prices of propylene, says Feng, "are just flying up," while a burgeoning worldwide demand for fertilizer has fueled price jumps for ammonia.

Meanwhile, butadiene, the third feedstock for ABS, is not only more expensive this year, but is "globally tight," says Feng. The reason, he explains, is that butadiene is a byproduct of ethylene crackers, and the amount of butadiene obtained depends on the particular hydrocarbon fraction fed into a cracker. For various reasons, it has become uneconomical to use the sort of hydrocarbon feeds that produce lots of butadiene, and that has contributed to the global shortage of this material. So a lower output of butadiene, coupled with a "heavy demand" for the material has contributed to the butadiene shortage, Feng reports, with buyers already on allocation. But for the most part, he says, "you can get butadiene, but you're paying very steeply for it."

As for the availability of ABS itself, Feng says that because demand for the resin is down this year due to the bleak U.S. economy, ABS should be readily available. For example, one of the largest outlets for ABS, automobiles and transportation, is in trouble. Auto industry analysts, for example, are predicting that 2008 U.S. car sales will be as much as 1 million units below the 16 million/year norm that has prevailed for much of this decade. ABS represents a "sizable piece" of the plastic materials used in automotive interiors, says Paul Blanchard, director of engineering plastics at CMAI.

ABS is also being challenged in automotive applications by a lower priced material, polypropylene. While polypropylene has the requisite high-temperature resistance for this use, it has traditionally lacked the mechanical properties that would allow it to be molded into thin-walled parts. But researchers have been addressing this limitation, notes Blanchard. As a result, he says, polypropylene has been "gaining ground" over ABS in automotive parts.

The downturn in construction is also hurting ABS. "You don't usually think of ABS as a construction material," Blanchard says. "But it actually goes into quite a few refrigerator and appliance applications, where the lack of new construction and the slowdown in consumer spending is negatively affecting ABS sales." Many new homes and renovated bathrooms have ABS-lined shower stalls and bath tubs, and these applications of ABS are also suffering, Blanchard says. ABS piping is another important sector that has been hit hard by the construction slowdown, Feng notes.

But for those who are still using ABS in manufacturing, these are trying times. At the Robson Company, a small Girard, Pa. custom injection molder, Christopher Robson, the president, says higher prices of ABS have spurred him to look for alternative suppliers of the resin and to purchase more regrind. But these practices do not cover all his higher costs and he has had to pass on the difference to his customers. Most customers have accepted these increases, Robson says, because their products are tightly specified around the performance properties of ABS, so that switching to other resins is not an option. "We do try to save money for our customers by negotiating how much regrind they are willing to accept in a product," Robson says.

Whether ABS buyers will have to cope with even more price increases this year is uncertain. Feng does not believe that the recent dips in crude oil rates will necessarily lead to falling ABS tags. Producers of the resin are still "playing catch-up" in response to past oil increases, he says. As far as the latest round of price nominations, Blanchard says "it's unclear how successful they will be in a weak demand and oversupply environment." But with ABS demand expected to remain sluggish well into next year, Feng believes that prices of the resin may "pause" for a while, especially if the producers manage to push through all or most of their latest round of increases.