European PS, ABS under pressure from upstream markets

Styrenics markets across Europe witnessed another round of up to 3-digit hikes in May, supported by the higher styrene settlement and supply constraints. PS markets have risen for the 7th consecutive month, while the ABS market has extended the longest-ever rally into May.

As for June, players discuss what is likely to unfold in Europe’s styrenics markets under the shadow of sharp downward corrections in the spot styrene and benzene markets.

June SM, benzene contracts awaited lower

Spot benzene prices have been on a downward trend since H2 April, bringing cumulative drops to $430/ton. This led to bearish expectations for the next settlement, considering the €369/ton hike in May contracts.

Expectations suggest that benzene’s outcome will be pivotal in determining the direction of styrene contracts. Spot styrene monomer markets have already lost around $240/ton since the end of April.

Moreover, May contract level is nearly 63% above spot styrene prices.

Several players reported that styrene contracts are mainly awaited to settle with decreases of around 3-digits. However, a few sources are not excluding rollovers as spot styrene prices have been erasing earlier losses in the latter half of the month for some time now. Regional supplies are still deemed limited amid Versalis’ planned maintenance. Eyes will be locked on styrene’s trajectory and arrival of US imports.

A major market participant opined, “Styrene may recover in the following days as supplies are still limited. We may see rollovers in June styrene contracts.”

Tightness may prop up ABS prices

ABS inj. prices hit fresh record highs after 12th straight months of hikes in May. According to the weekly average data on ChemOrbis Price Index, ABS prices have soared by around 145% in Italy and 133% in Northwest Europe since the uptrend kicked off in early June 2020.

June expectations emerge on a stable note, with some players justifying their expectations with the ongoing tightness. There are not many import volumes heading to Europe in the near term amid logistical challenges and sky-high freight rates. Not only the chronic tightness but also firm underlying demand may prop up ABS prices next month. A player even argued that it is unlikely to see decreases until the end of summer.

“It is difficult to find ABS as the market is very tight. Our demand is strong since the start of 2021, while it is even higher compared to the previous years. We expect decreases for styrene but rollovers for ABS,” a buyer said.

Nevertheless, a distributor opined, “We are doing back-to-back business. ABS prices may also fall in case of lower styrene settlement as ABS prices stand at all-time highs.”

Asian ABS markets have recently yielded to the downward pressure from plunging styrene and demand concerns due to the Covid resurgences, as a side note.

PS on the verge of decreases

According to the weekly average data on ChemOrbis Price Index, GPPS and HIPS prices have soared by around 100-120% in Italy and in Northwest Europe since November 2020.

PS markets are widely expected to reverse the course after 7 months of price gains. Softer expectations for June prompted buyers to limit purchases during May, which in turn led to lower consumption rates in some sectors.

Although PS supplies are not as tight as ABS, overall availability is reportedly limited. Thereby, participants reported that PS prices may see smaller decreases compared to the possible styrene drop. A buyer opined, “Prices will see gradual downward corrections rather than a collapse.”

Meanwhile, robust activity in the construction sector has paved the way for increased orders amid preparations for the summer period. There remains uncertainty as to whether or not EPS prices will remain flat regardless of the monomer movements.