PS and ABS markets buckle under feedstock pressure, weak demand in Europe

Having closed June with massive decreases, European PS and ABS markets opened the new month with relatively smaller decreases of €65-80/ton amid feedstock correction and stalling demand. ChemOrbis Pride Index suggests spot ABS markets hit their lowest since late 2020 and PS markets since early 2021.

PS markets receded further after reversing the course in June, while ABS markets mostly followed a stable to softer trend since the start of the year.

ABS producers mostly followed the entire cost pass-through from feedstock settlements that were agreed €87/ton lower for styrene, €80/ton lower for ACN and €70/ton lower for butadiene. Still, PS producers were seen applying decreases slightly below the styrene settlement, which was attributed to the larger drops in June as well as narrower margins.

Prices break below new thresholds, further corrections seem likely

Initial PS and ABS offers emerged €70-80/ton lower in most cases. In Italy and West Europe, overall spot PS prices were assessed €70/ton lower at €1430-1560/ton for GPPS and €1530-1660/ton for HIPS on FD, 60 days basis. Spot ABS was assessed €70-80/ton lower at €1870-2000/ton for inj. and extrusion on FD, 60 days basis.

Suppliers are aiming to hold the downturn in check. Yet, PS buyers plan to push for decreases matching the styrene drop going forward, pointing to murky demand outlook. That is to say, PS deals may be closed with further decreases as the month wears on if purchasing volumes remain negligible. A producer source reported that they are open to give decreases of €100/ton for ABS, considering their elevated levels.

No interest in imports

Apart from locals, import offers with delivery in September were rather attractive. South Korean GPPS and HIPS were offered respectively at €1300-1320/ton and €1400-1420/ton DDP, which is supposed to be delivered in two months. Northeast Asian ABS inj. offers stood at €1500-1550/ton DDP, with delivery in September. However, these offers did not grab much interest among buyers, who cannot figure out where European price levels will be when autumn starts.

Overall demand remains fragile

Overall demand remained subdued, considering summer holidays and high inflation. A market source remarked, “People are not interested in purchasing durable goods, while there may not be major changes in the market conditions until the year-end.”

Indeed, manufacturers reported low order entries for July. Some of them reported, “We are running our lines at full rates, while we are mostly manufacturing goods with delivery in September. Most players will shut their plants for around 3 weeks in August.”

Nevertheless, some sellers expect to receive more price inquiries this month as buyers were holding off purchases ahead of fresh decreases in July. Converters may need to replenish their stocks, which have been running low. Yet, there has been little incentive for stock replenishment in the distribution channel as they are trying to keep stocks at bare minimum.

Producers reduce output to match weak demand

A source from a regional producer said, “Sales volumes are 25-30% lower than usual. Our polymer production is reduced by 30% to counterbalance weak demand. Demand may remain low until the end of 2023.” A different supplier also curbed its ABS production by the same amount, commenting, “We are not planning further cuts, but if demand remains weak, we may be forced to go for a shutdown.”

Meanwhile, participants also heard about the delivery delays reaching 4 to 6 weeks as one of the European suppliers reduced output. Although there are no supply concerns for the time being, a major market participant opined, “Supply will shrink at some point as producers cannot ramp up to full rates rapidly once buyers decide to stock up material.”