Import PS, ABS markets recover amid upstream gains in Egypt
Import offers hit historical lows in May
In early May, competitive offers brought the overall ranges down to their lowest in more than 11 years, with prices hitting $900-920/ton for HIPS inj. and $830-850/ton for GPPS inj. Around the same time, ABS offers emerged as low as $1100-1120/ton CIF, marking an all-time low, according to ChemOrbis Price Index.
What caused the crash?
As early as February, Egypt’s import styrenics markets, which source heavily from Northeast Asia, started to see a demand slowdown caused by lengthening delivery times amid rate cuts and logistical issues. Demand then came under an even heavier pressure with the unprecedented falls in oil and more than a decade low upstream prices.
Oil prices reached a 17-year low on March 18 and WTI oil futures fell into negative territory for the first time in history on April 20. Upstream values tracked the declines in crude oil and naphtha prices. As ChemOrbis Price Wizard shows, CFR China and FOB Korea spot prices declined by $280/ton over a span of three weeks in March, hitting more than a decade low in late April.
Signs of rebound start to show
China ended or relaxed all lockdowns in China by early April and more countries began the gradual easing of the lockdown restrictions as the cases started to dwindle. This has improved the outlook for crude oil and the price of oil has approached $32 a barrel.
Import PS and ABS prices in China benefited from this cost support and local offers began to tack on gains from late April into early May. This firmer sentiment was mirrored by several Northeast Asian and Southeast Asian traders as well.
Egypt’s markets emerge from bottom
The buoyancy in crude oil futures and spot styrene prices finally put a floor under import PS prices last week while the import ABS market recovered from an all-time low during the same week.
Following this cautious rebound, new HIPS offers emerged with visible increases of $30-50/ton while GPPS inj. offers moved up by $20-30/ton as of May 18. These latest increases brought ranges to $960-1000/ton for HIPS and $850-880/ton for GPPS inj., all on CIF Egypt.
Import ABS offers reported so far were higher, up around $20-50/ton from last week at $1150-1200/ton CIF Egypt.
What about demand?
The Egyptian government has recently released a three-stage plan to fully reopen the economy at the same time applying for another $9 billion in foreign funding, in addition to $2.77 billion in financial aid it received from IMF.
Despite the government’s efforts to help limit the decline in international reserves, the COVID-19 pandemic has drastically impacted the country’s economic activity. Liquidity has remained as a major concern for players while demand diminished as a result.
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