Europe’s ABS market looks for direction after nearing 3-year low

In Europe, ABS players started to discuss about the February outlook amid divergent market drivers after they closed January deals with rollovers to moderate decreases.

ABS prices hit nearly 3-year low by mid-January

Some ABS sellers had to step back from their initial rollover attempts due to the unsupportive supply-demand dynamics and prices moved below new thresholds.

According to ChemOrbis Price Index, ABS prices in Italy and Northwest Europe have been on a downtrend since September 2018 and they hit their lowest levels not seen in almost 3 years by mid-January this year.

Is it the bottom?

Players concur that the downward pressure on the ABS market eased after prices posted cumulative decreases of up to €400/ton on a weekly average in the past 4 months, according to data from ChemOrbis Price Index.

Will higher ABS offers from Asia help Europe firm up?

They think that producers may approach the market with some increases in February due to rising upstream costs as well as Asian suppliers’ firmer pricing policy for February in their export markets. Participants in Turkey and Indonesia reported receiving higher February offers from South Korean producers in line with firmer styrene costs.

Spot styrene in Europe posts marginal gains since early January

According to ChemOrbis Price Wizard, the weekly average of spot styrene prices posted only marginal gains after they touched more than a 2-year low by early December last year. As for February, expectations for styrene contracts mostly center on a stable or slightly firmer outcome. A major market participant opined, “February styrene contracts may settle €10-20/ton higher.”

A disposable manufacturer reported hearing voices for increases of up to €50/ton on February styrene contracts, meanwhile.

Buyers approach firmer February talks with skepticism

Buyers, meanwhile, are pointing to the lack of healthy demand from end markets and weaker market conditions for ABS than for PS market. They mostly orule out the possibility of seeing an immediate change in the market due to the slowdown of the automotive and packaging sectors in the region.

According to them, ABS prices may hover at around their current levels as firmer costs might counterbalance weak demand and comfortable supplies. Moreover, firmer talks did not entice buying interest so far and they continued to stick to their basic needs only.

A sheet extruder in Austria commented, “We purchased only small quantities as our end-product demand has yet to improve.”

Brexit and global economic slowdown weigh on ABS demand

Uncertainties over Brexit and global economy were considered to be other factors clouding demand in certain industries. Players are to observe economic slowdown in Europe as well as US-China trade war closely going forward.

Although US-China trade war took its toll on China’s manufacturing sector during 2018, trade war truce between the two created some positivity to support the current firming in Asia.