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European PS, ABS markets brace for further drops in Dec

by Manolya Tufan -
  • 25/11/2019 (11:59)
In Europe, the approaching year-end amid high stock levels has exacerbated pressure on the sellers’ side and prompted them to apply further decreases for PS and ABS. December will be another month of price drops for styrenics, according to players.

Dec likely to notch the third consecutive month of drops

If bearish expectations for December materialize, it will be the third straight month of decreases for PS and ABS. After opening the month of October on a stable to softer note, prices have mostly followed a decreasing trend since then.

Local GPPS and HIPS ext. prices in Italy lost around €75-80/ton in the past two months, the weekly average data on ChemOrbis Price Index showed. Similarly, local GPPS and HIPS extrusion prices in Northwest Europe lost around €65/ton during the same period.

ABS injection and extrusion in Italy and Northwest Europe have also dropped by around €50-55/ton since early October.

Prices hit a decade low for GPPS, 5-year low for HIPS in Italy

In Italy, local GPPS ext. prices have hit their lowest levels not seen since December 2009 recently. HIPS prices, meanwhile, stand at their lowest levels since February 2015, as per data from ChemOrbis Price Index.

November drops in Northwest Europe pushed the weekly average GPPS and HIPS extrusion prices back to late July levels, according to ChemOrbis data.

Decreases may gain speed on destocking activities

PS sellers already offered decreases beyond the styrene drop to stimulate sales within November. ABS sellers also applied larger discounts compared to the initial offer levels as the month wore on. Another factor that the ABS market was grappling with was competitive Asian origins.

Accumulated stocks due to the persistently weak demand will push more sellers to accelerate their destocking activities. December will be a shorter month as market participants will not be in the market in the second half of December for year-end festivities.

SM dips to nearly 5-year low

On top of the poor supply-demand dynamics, lower upstream costs also keep the outlook bearish for downstream markets. Supply length for styrene was exacerbated by the weak downstream buying interest and pushed spot styrene prices lower.

Widespread expectations call for notable drops in the next styrene settlement.

Spot styrene prices dipped to their lowest levels not seen since January 2015 during November, according to data on ChemOrbis Price Wizard.

Meanwhile, December butadiene contracts were agreed with a decrease of €50/ton from last month.

Long-term expectations diverge among players

As for the longer-run, some players expect a slow start to 2020 amid a series of bearish factors including ailing global economy, shrinking demand for single-use plastics as well as slowing automotive sector.

“We will see further price cuts in December while the bearish trend might be extended into the first quarter of 2020,” a distributor opined.

Meanwhile, others expect limited decreases as suppliers will try to avoid losing further margins despite unsupportive market conditions. A distributor commented, “December will be the last month of decreases as producers may attempt to push prices higher in 2020. They have lost margins during the past months.”
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