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European ABS faces large hikes on heels of costs

by Manolya Tufan - mtufan@chemorbis.com
  • 08/04/2019 (10:45)
In Europe, the ABS market witnessed sharp hikes on the back of stronger feedstock costs. However, players are discussing to what extent these increases can be absorbed, taking weak demand and ample supplies into account.

Up to three-digit hikes from European producers

Trinseo and Ineos announced increases of €90-95/ton on their ABS offers following higher feedstock settlements. Styrene, butadiene and benzene contracts for April indicate respective increases of €97.50/ton, €40/ton and €82/ton.

A South European producer applied larger increases of €100/ton, pointing to the regional production outages as well as their need to recover their margins.

Firming trend gains speed in April

Cost-driven hikes pushed spot ABS prices to their highest levels not seen since November 2018, according to the weekly average data from ChemOrbis Price Index
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ABS suppliers had to step back from their initial offers in March, after they asked for increases of up to €75/ton. March styrene contracts were settled up €60/ton, meanwhile.

Sharp hikes cut buying appetite

Having secured some stocks back in March, converters do not feel an urge to purchase and they are mostly sidelined in the anticipation of obtaining discounts.

Stock levels on the buyers’ side will determine if slight discounts will be obtainable in the days to come. Furthermore, demand may not improve remarkably due to Easter and bank holidays towards the end of the month.

The fact that demand for the main ABS applications remains slow is cited as another reason behind buyers’ resistance to the sizeable hikes.

A sheet extruder commented, “We have sufficient stocks and we may even skip purchases amid poor end-product demand. The size of the increases deters us from engaging in fresh purchases.”

According to players, suppliers might revise their hike requests downwards in the following days, as was the case last month.

“Supply availability is still comfortable despite some production outages while demand may remain weak due to the festivities. Smaller increases of €70-80/ton may pass on ABS deals this month,” opined a distributor.

Imports in Italy retain competitiveness despite hikes

Meanwhile, fresh import offers from South Korea posted increases recently whereas they retained their competitiveness against domestic offers. South Korean ABS offers stand well below the low end of the local price ranges.

A few traders offering import cargoes commented that they are open to negotiation in case of firm bids, considering the lack of demand.
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