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Demand key as Asian PS and ABS market trends diverge

by Shibu Itty Kuttickal -
  • 27/09/2022 (10:04)
Styrenic polymers ABS and PS have shown a divergent trend recently despite the strength in feedstock styrene over the past two months.

Traders said PS demand has been slowing and has hit market sentiment despite rising costs as styrene prices gained by about 12% in the past five weeks, ChemOrbis data show. At the same time, ABS demand has picked up and this, along with the rise in costs, has boosted prices.

Styrene –Asia

ABS, PS on opposite paths

ChemOrbis data show that ABS prices in both China and Southeast Asia fell by about 33% since early March till the third week of September before starting to bottom out. Meanwhile, GPPS prices have so far slid by 18-23% in the two Asian markets since early March, with no end in sight to the bearishness.

In China, the overall range for import ABS inj. prices for the week ending September 23 were assessed $10-30/ton higher from the previous week at $1390-1490/ton CIF, cash. In Southeast Asia, prices were assessed stable to $20/ton higher at $1490-1550/ton CIF, cash. ABS markets in both the Asian regions have seen a firm trend for the past two weeks.

As for PS markets, the same week saw import prices in China for overall origins assessed stable to $20/ton lower at $1330-1380/ton for GPPS inj., and $1390-1430/ton, for HIPS inj., both on CIF, cash basis. And, in Southeast Asia, import GPPS inj. prices from all origins were assessed $20/ton lower on the week at $1310-1410/ton, while HIPS inj. prices were stable to $10/ton lower at $1430-1520/ton, all on CIF, cash basis.

It’s mostly a demand story

Market participants pointed to the difference in demand trends to explain the divergence in the pricing of the styrenic polymers.

As for PS, the persistently slow demand has kept prices from moving in a similar direction with ABS. “In fact, we haven’t yet seen the advent of the peak demand season in China yet. And, we don’t see demand turning around for the rest of the year because of the slow global economic growth,” said a source at a major PS producer in Taiwan.

At the same time, a slightly stronger demand, coupled with the increase in styrene prices, have given ample reasons for ABS sellers to raise prices. Traders expect demand to strengthen as automobile demand in China has seen a rising trend. There’s also the possibility of higher sales in refrigerators ahead of the year-end helping the demand for ABS to rise.

“Offers rose as domestic demand has kept strengthening and feedstock costs have risen,” said a trader in China. “Demand has risen especially from the automobile sector as China is currently pushing for green energy cars. The same goes for export demand too,” he added.

Styrene costs help ABS, but have no effect on PS

In Asia, spot styrene prices were assessed higher by around $30/ton from the previous week at $1150/ton CFR China and $1180/ton FOB South Korea at the end of last week. ChemOrbis data show that spot styrene prices were on an uptrend mostly since the second half of August and gained 12% since then amid increased demand and short-covering.

The firm ABS prices were in line with a rising weekly trend in styrene markets even as crude oil was down from the previous week.

Meanwhile, Chinese domestic demand has continued to strengthen. Domestic prices were assessed CNY200-350/ton ($28-49/ton) higher at CNY12200-12600/ton ($1536-1587/ton, without VAT) ex-warehouse, cash including VAT basis.

On the other hand, stronger styrene prices did give a handle for sellers to raise PS prices, but there was strong resistance from downstream buyers, who reported weak demand from end-user markets.

Peak season already, but demand keeps everyone guessing

That is the question that most market participants are searching answers for. Even for the ABS markets, players say there’s still room for demand to strengthen further, considering that it is already peak season currently. “But the global economic slowdown is acting on market sentiment,” he said.

A Chinese ABS trader said major producers in the country had kept raising offers lately. “The increase in styrene prices is a shot in the arm for sellers especially as demand is apparently rising,” he added.

At the same time, although styrene’s strength may be supportive for the PS markets, the lack of demand is likely to keep prices range bound or lower. “We expect prices to move sideways,” said a Chinese trader. At the same time, few are expecting demand to strengthen in the near term.
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