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Europe’s PS, ABS markets head for another bullish month

  • 19/12/2017 (04:24)
In Europe, costs-driven hikes were reflected onto PS and ABS deals this month, although demand was not spectacular due to the fact that bullish expectations for December and also for January pushed some buyers to engage in pre-buying activities back in November.

Players expect the bullish trend to be extended into January as well as the first quarter of 2018 given an expected tightness in styrene availability during the maintenance shutdowns in Q1 2018.

Some European buyers have purchased from hand to mouth in December as they built good stocks in November to avoid the expected increases, which created some delivery delays. A distributor in France noted, “Our supplier delayed deliveries from 8 days to 2 weeks since many buyers did pre-buying in November. Meanwhile, some buyers continue to do pre-buying in December since they expect large increases ranging from €50/ton to €100/ton for January PS prices.”

Sellers were not open to negotiate their prices given the bullish January outlook and they preferred to hold onto their stocks. A PS buyer confirmed that his bid for an €80/ton increase for December GA prices was rejected by his supplier who seeks €90-95/ton hikes.

A source from a European producer said, “We are postponing new orders to January as we are sold out for December. The outlook for the next first quarter is firmer, as was the case in the first quarter of 2017. The increase in the number of orders we receive from traders makes us think that demand is good and ABS availability has shrunk. Demand from Turkey, Northwest Europe and Italy has improved ahead of the firmer outlook for the Q1 2018.”

Players also point to the fact that the European PS and ABS markets are not likely to find relief from the import market as Asian suppliers’ cost-driven hikes both for PS and ABS caused them to lose competitiveness in their export markets. Rather, European producers prefer to divert some of their ABS cargoes to Asia, where China’s import ABS prices hit their highest level since mid-February, as data from ChemOrbis Price Index suggest. This is because demand is higher and regional producers’ availability is limited amid preparations for the Chinese New Year.

Affirming the strong hikes in the import market, a compounder from Germany reported receiving PS, ABS offers from South Korea with $60-100/ton increases due to the rising costs in Asia. A trader in Italy also heard voices of strong increases of €100-150/ton for import ABS offers in January.

There are also some players who think that styrene shutdowns might not support three-digit hikes in January, expecting more moderate hikes. They are underlining that the low season for some applications as well as buyers’ widespread pre-buying activities. A food packager in Italy noted, “We purchased three new PET lines to avoid PS volatility. We expect stable January prices while another round of increases should come in February.”
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