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PS, ABS markets to see new drops on plunging styrene in Europe

by Manolya Tufan - mtufan@chemorbis.com
  • 05/09/2022 (03:00)
Styrenics markets across Europe will post another round of notable drops as autumn kicks off amid a plunge in styrene settlement and growing fears over consumption. Initial PS offers started to emerge with 3-digit drops following lower styrene contracts. Weak market conditions have also set the table for ABS price concessions this month.

Styrene follows benzene lower

September benzene contracts settled with €318/ton drops, while the entire benzene drop was not reflected on styrene contracts as was anticipated. Styrene settlement for the month indicated €287/ton decreases from August.

According to ChemOrbis Price Wizard, spot styrene prices rebounded as of last week to draw near to $1100/ton FOB NWE level after posting cumulative decreases of $200/ton over the course of August.

PS sellers try to put a cap on losses

Ineos Styrolution announced its new PS prices with decreases of €210/ton right after styrene settlement. Suppliers try to avoid reflecting the entire styrene drop on their PS offers to compensate for the margin losses amid high utility costs.

Producers are trimming production rates in response to soaring utility costs and slower demand. Apart from planned maintenance shutdowns, some regional producers idled their plants or cut rates below 80% due to higher gas prices. According to participants, this news had little to no impact on spurring buying appetite as sellers seemed to have high stocks to deplete.

Gap between HIPS and PPH at record-high

Switching to PPH amid elevated PS prices has come to the fore recently, considering the huge gap between the two products. This was because PPH prices have been on a downtrend since May and posted larger decreases than PS.

To put it into perspective, PPH inj. prices fell by around €750-800/ton or 34-36% since May, while HIPS ext. prices saw drops of around €450/ton or 17% in August.

According to ChemOrbis Price Index, the gap between HIPS ext. and PPH inj. prices narrowed to €800/ton but it still stands at multi-year highs.

The huge premium of PS prices over PPH will deter more buyers from purchasing PS and subsequently put further strain on demand. This would intensify the pressure on prices and pave the way for larger PS discounts than the initial offer levels.

FD Italy–PPH–HIPS

ABS under pressure from aggressive imports

ABS prices have been coming off their peaks since May, barring a short-lived rebound in July. Prices stand at their lowest levels since late March 2021. They will post further declines in September amid lower costs, weak demand, ample supplies and aggressive import offers.

Some players think that high energy costs would only have a negligible impact on the size of ABS drops given weak demand. Many sources confirmed that ABS demand is worse than PS.

As for imports, Asian origins stand well below Europe’s spot ranges as more import suppliers diverted their cargoes to the bloc amid persistent weakness in Asian demand. The pressure from aggressive imports will remain intact as container freight rates are gradually falling due to the lower trading volumes across the board.

Northeast Asian ABS ext. deals were closed at €2400-2500/ton DDP, 60 days, with delivery in November. This stood €150-250/ton below the low end of the spot ranges in Italy. As for ABS inj. grades, import origins were roughly €300-400/ton below European origins.

A market player opined, “European ABS prices will not see hefty drops to reach import levels after September drops.”

End markets offer no glimmers of hope

It seems unlikely that resin consumption will notably rise even if converters replenish some stocks after the long summer break. This is related to the recession fears and growing concerns about rising electricity bills. Some sources reported that manufacturers may suspend production on their lines amid lower order entries and surging utility costs.

Automotive, construction, furniture and white goods sectors remain under pressure from lower consumer spending. Consumers spent more on travelling, while macroeconomic uncertainty reduced durable goods consumption. Food packaging applications are also expected to stage a slowdown as inflation is also driving up the cost of services and holiday season nears to an end.
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