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PS and ABS markets brace for another round of hefty increases in Europe

by Manolya Tufan -
  • 29/02/2024 (02:47)
Across Europe, styrenics markets saw 3-digit increases passing on deals in February, with sellers mostly achieving the cost pass-through from styrene. Regional sellers had a chance to improve their margins by applying increases beyond costs in some cases given delivery delays and a lack of imports. Players are now bracing for another round of strong increases in March, with their eyes on the next styrene settlement.

Spot styrene stands at a 6-month high despite recent correction

The cost side will be one of the main drivers of the uptrend in March as styrene has strengthened a lot during the month.

According to ChemOrbis Price Wizard, spot styrene prices on FOB NWE basis hit their highest level since H2 August 2023 before seeing some corrections by around mid-February. Despite the recent correction, spot prices stand at a 6-month high amid tight regional availability and logistics disruptions impeding imports to the EU.

In production news, Trinseo shut its 500,000 tons/year styrene plant in Terneuzen back in November 2023 permanently as a part of the company’s restructuring plan.

Repsol shut its 450,000 tons/year styrene unit in Tarragona in January for a planned maintenance.

Versalis’ 190,000 tons/year styrene line in Mantova was shut in July 2022 due to the low margins. However, this plant will be restarted in March to cover the producer’s feedstock requirements when its bigger styrene line will undergo a planned turnaround. 430,000 tons/year styrene unit will be shut in mid-April and the restart is expected by mid-June.

ChemOrbis data also revealed that spot benzene prices witnessed strong gains throughout February to hit their highest levels since July 2022, disregarding this week’s slight downward revision. Accordingly, prices on CIF NWE basis rose by around $150/ton since late January. Participants expect to see increases in the monthly benzene and ethylene settlements, while styrene contracts are expected to settle with 3-digit increases.

Partial pickup in PS demand

Having wrapped up February deals with increases of around €190-200/ton, PS buyers engaged in some restocking activity to hedge against future hikes. A distributor reported to have closed late February deals with hikes of up to €250/ton, considering firmer March outlook. PS prices are widely expected to follow higher styrene settlement.

According to ChemOrbis Price Index, spot GPPS and HIPS prices hit their highest levels since late October 2023. The weekly averages for extrusion grades on FD NWE basis stood at around €1800/ton for HIPS and €1700/ton for GPPS, data revealed. Prices on FD Italy basis were slightly below these levels, as a side note.

ABS tighter than PS

Given its bigger dependence on imports, ABS supplies were a shade tighter than PS. A lack of shipments from Asia amid longer lead times and thin buying interest led to a squeeze in import availability within the bloc, let alone delivery delays. Limited supplies helped sellers to achieve increases, €150/ton or more, larger than costs that were estimated to have risen by €110-120/ton for February. Prices in West Europe currently stand at their highest levels since June 2023.

However, ABS buyers did not face any difficulty in meeting their needs as this was counterbalanced by low consumption across many sectors.

The €75/ton higher butadiene settlement for March and expected hikes in styrene will push ABS higher next month. Approximately 58% of styrene, 25% of acrylonitrile and 18% butadiene are used in the production of ABS.

Will demand absorb hefty price hikes?

Supported by styrene, sellers aim to apply 3-digit increases on PS and ABS prices. Some regional suppliers even stopped orders until early March. However, the size of March hikes will be determined by the extent of import delays. A trader opined, “If more cargos arrive, there will be pressure on the market and hefty hikes may not work.”

The workability of initial hike attempts will also hinge on the state of demand given that consumers watch their spendings on non-essential items amid high interest rates. A lack of bullish indications for a swift economic recovery impeded a broader revival in demand across derivative markets despite the recent replenishment activity amid supply woes stemming from Red Sea diversions. It is still early to gauge seasonal demand ahead of the approaching spring season, as a player put it.

General purpose PS is used in food packaging, disposable utensils, cutlery and various other consumer items. High impact PS is used in consumer electronics and toys while extruded PS is used in the construction industry as insulation.

ABS is widely used to make household and white goods, as well as in-vehicle components.
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