European PS sentiment cools off on styrene correction; ABS remains unfazed

In Europe, PS sentiment appears to have turned cautious as players moved to the sidelines on the back of steep corrections on styrene monomer. Still, ABS players have remained unfazed by the upstream volatility, with the support from supply-demand dynamics.

Styrene comes off its peak

Players were seen revisiting their earlier expectations calling for steep hikes in April styrene contracts this week. European styrene monomer prices erased some of their earlier gains last week after hitting an all-time high in early March. Prices still stand at their highest levels since ChemOrbis started compiling data in 2008.

A severe tightness of prompt availability and outages in the cold-hit US were the main drivers of unprecedented gains, while the expected arrival of import cargoes brought some relief.

Asian styrene prices also tumbled amid softening sentiment. Spot prices on CFR China and FOB Korea basis dropped by around 22% in the past 3 weeks, ChemOrbis Price Wizard showed.

In the US, spot styrene prices retained strength at their highest levels since 2008 due to the slow return of capacities after the winter freeze. LyondellBasell’s Channelview site was in restart mode as of March 4. INEOS Styrolution’s Bayport styrene plant is scheduled to restart on April 12. Meanwhile, Cosmar’s styrene unit was restarted as of February 26 following maintenance work.

PS buyers fatigued amid meteoric hikes

European PS markets hit record highs after spot prices surged by around €500/ton on a monthly basis.

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PS buyers were fatigued by massive increases as they struggled to reflect surging raw material costs onto their end-product prices. Converters could find most, if not all, of the required volumes. PS supplies are not as tight as ABS or other polymers, while some delivery delays do exist.

Prices in the distribution channel were heard as high as €2000/ton FD, 60 days. Still, the number of deals remains few as buyers buy on a hand-to-mouth basis. Some converters plan to reduce run rates at their plants to cope with the tremendous price gains.
A distributor said, “Demand is not that bright as buyers hold onto their existing stocks. It is risky to build stocks due to mounting buying resistance.”

PS suppliers still intend to push prices higher, pointing to low availability and now chronic allocation cuts from regional producers. Still, whether this uptrend will be in full swing or not is mooted. Players argue that trading may grind to a halt in case of another round of sharp increases. Moreover, sharp corrections in the styrene monomer market keep players on their toes.

“It may be difficult to see further hikes passing on PS deals as prices are already too high,” a player opined.

ABS remains indifferent

The severe shortage of material has continued to be the main storyline in the ABS market despite sharp styrene corrections. Relentless hikes seen since H2 2020 have not put buyers off as it is a matter of finding material to keep lines running. Pent-up demand in the appliances and automotive sectors has been another reason for the sustainability of the longest-ever uptrend.

European producers failed to bridge the gap during the absence of Asian suppliers, with suppliers having sold out their quotas swiftly. Regional production was also trimmed due to the ongoing ACN shortage, which sent prices to an all-time high.

Lingering logistics bottlenecks not only keep freight rates from Asia at elevated levels but also pose challenges for smooth trading. That is to say; the near-term outlook will continue to be shaped by tightness as imports from Asia may not be resumed soon.

A distributor reported that an import offer he received was due for June delivery.