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European PS on brink of a softer trend after 6 months

by Manolya Tufan - mtufan@chemorbis.com
  • 26/04/2021 (10:34)
Regional players reported that Europe’s PS markets are likely to reverse course after 6 straight months of price hikes. According to players, a potential drop in May styrene contracts along with growing resistance against inflated prices will weigh on the market.

PS prices surge by more than 100% since November

PS prices have been steadily rising since the uptrend kicked off in November 2020 both in Italy and Northwest Europe. Higher upstream costs and restricted availability have been the key drivers of the uptrend and subsequently pushed prices to all-time highs in both markets.

According to data from ChemOrbis Price Index, the weekly averages of spot prices for GPPS and HIPS extrusion have posted cumulative increases of around €1100-1120/ton or more than 95-100% in Italy and Northwest Europe since the uptrend kicked off.

FD -Italy- Northwest Europe - GPPS - HIPS - Extrusion

Massive hikes hamper PS demand

However, cumulative increases in the past two months reached around €800/ton have caused jitters among buyers due to their inability to pass hefty cost increases on to customers.

Overall activity slackened further as buyers preferred to run their stocks down instead of buying at inflated prices in April. Moreover, there is a lack of confidence in the demand outlook as the upcoming term is rife with uncertainties that the pandemic poses amid lockdowns and the pace of vaccine rollouts.

Several manufacturers remarked that the ban on single-use plastics is a crucial factor weighing on demand in the long run, meanwhile.

Bearish styrene expectations weigh on PS outlook

Players are voicing their expectations of seeing a reversal in May after six months of firming in PS markets. With massive hikes hampering buying appetite profoundly in April, bearish expectations for the next styrene settlement also pushed buyers to the sidelines.

Styrene monomer staged sharp downward corrections for a month despite recent volatility in the spot market. According to ChemOrbis Price Wizard, spot styrene prices on FOB NWE basis posted increases of $120/ton in the past two weeks. However, they still stand 30% below their early March peak.

The majority of participants expects to see sharp drops of €200-300/ton in May styrene contracts, although styrene’s trajectory will remain under close watch until the end of April.

A possibly lower monomer settlement will make price losses in downstream markets inevitable, several players concurred. Mounting resistance among buyers is another pressure point, which may push sellers to apply downward corrections on their prices.
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