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Downtrend loses steam in Europe’s ABS markets, PS stabilizes

by Manolya Tufan -
  • 11/05/2020 (09:42)
PS markets in Europe seem to have stabilized after two straight months of decreases, while the downtrend in the ABS markets entered its third month in May due to the slow return of demand. Good packaging demand served to keep PS market flat this month. Plus, projections of improved demand in line with the easing of lockdown measures across Europe supported the sentiment.

Quick recap of what happened from March onwards

The downward trend kicked off as of March both in the PS and ABS markets following three-digit drops in the monthly styrene contracts. Decreases gained steam for both products in April owing to the stronger cost pressure.

As can be seen from ChemOrbis Product Snapshot below, GPPS and HIPS ext. prices in Italy and Northwest Europe saw cumulative decreases of €210-225/ton since early March.
ABS inj. prices posted decreases of about 14% within this timeframe.

*Right click the image and open in a new tab to view the full-sized snapshot.

May styrene contracts indicated a small drop of €13/ton when compared to the past two months. PS markets seem to have stabilized for May, while ABS markets are falling for the third consecutive month.

Weak demand and €200/ton lower butadiene contracts were blamed for the additional ABS drops. Still, the downward spiral lost some speed compared to April as initial May ABS offers emerged with decreases of up to €55/ton.

ABS demand lags behind PS

PS demand has been faring better than ABS during March and April due to the robust consumption of single-use plastic packaging and medical applications. Thereby, PS sellers managed to reflect monthly styrene drops on their prices partially in the past two months.

Buying interest for disposables is likely to remain firm as part of anti-COVID measures for a safe return to public life.

With the severe contraction in demand from automotive and household appliances sectors, most ABS applications experienced a stronger pressure on top of plunging costs back then.

European countries started reopening businesses, with restrictions loosening across the continent as the spread of the coronavirus slows. Still, demand recovery from the pandemic is likely to take time amid ongoing challenges. The partial reopenings will surely ease the pressure on economies, while a demand revival in certain sectors are expected to be seen towards the end of May or June, players concurred.

Projections mostly suggest that PS sellers would not concede to decreases as the month wears on. Only those, who offer on the high ends of the current ranges, may trim their offers slightly, a player argued. Nevertheless, ABS is believed to have room for additional decreases owing to the fact that demand outlook is not promising.

No buyers flock to buy despite multi-year low levels

Although PS and ABS prices stand at more than a decade low, buyers are not willing to engage in bulky tonnages due to the lack of clarity about future demand and liquidity issues. Plus, some of them built stocks last month out of expectations that prices might have hit the bottom.

“We expect to see a gradual recovery following the end of lockdowns. End markets may not flourish immediately,” a buyer opined.

Yet, players keep a close eye on the upstream markets, where spot naphtha and styrene prices rebounded in response to the higher crude oil prices. Spot naphtha prices rebounded from multi-year lows and rose by around $60/ton during the past week, according to ChemOrbis Price Wizard. Data unveil that spot styrene on FOB NWE basis posted increases of $70/ton in the past two weeks.
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