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PS markets fare a tad better than ABS in Asia, Türkiye

by Manolya Tufan -
  • 21/08/2023 (09:14)
Styrenics prices have been tracking a stable to slightly firmer trend for multiple weeks in Asia and Türkiye. PS and ABS markets have been rangebound amidst scarce done deals on one side and rising styrene costs on the other side. Although hikes cannot be easily digested for both, PS has been performing slightly better than ABS.

Cost support somewhat diluted by weak dynamics

Spot styrene prices both on CFR China and FOB Korea basis stand at more than a 3-month high, according to ChemOrbis Price Wizard. Despite levelling off a bit last week given softer crude oil futures, spot monomer prices indicated cumulative increases of $135/ton since their reversal in late June.

However, rising styrene prices underpinned downstream markets rather than pushing them higher steadily both in Asia and Türkiye. Styrenics producers could manage to pass through the increase from styrene only partially as poor global economics weighed on consumers and led to burgeoning availability in the market.

Requirements low ahead of high shopping season in China

Downstream buyers have been purchasing according to their needs as they remain hesitant towards high-priced raw materials. This has been because the post-pandemic challenges persisted in China, with export demand in major economies like Europe and the US remaining low amid sticky inflation and recession fears.

Requirements usually rise around this time of the year at the converter level heading towards the holiday shopping season in China. However, sluggish derivate demand reinforced the wait-and-see sentiment among buyers. Hence, supply remained a pressure point as major producers in Asia pointed to a lack of supply concerns in the market due to the scarcity of sales.

ABS draws weaker scene compared to PS

Despite being supported by strong costs, ABS markets have been pressured by ample supplies and weaker demand. The weaker performance of ABS is attributed to the subsiding consumer spending on most applications. ABS is used for appliances, toys, consumer electronics as well as in the automotive and construction sectors.

In China and Southeast Asia, overall import PS prices have been on an uptrend for the past six weeks to post increases of $70/ton in total and they hit their highest levels since mid-May by mid-August. China’s import ABS market gained $50/ton since H2 June, while Southeast Asia posted only a marginal increase of $15/ton since around early June.

When it comes to Türkiye, initial hike requests could not be easily absorbed, with upper ends seeing resistance both for PS and ABS. Import suppliers had to step back from their offers at elevated levels and conceded to more moderate hikes due to a lack of demand support. In Türkiye’s local market, ABS prices defied rising import offers and tracked an opposite direction during August, mirroring the sluggish demand amid tight liquidity. However, local PS markets absorbed part of increases after sellers revised their offers upwards to reflect rising replacement costs on the distributors’ side.

ABS loses premium over HIPS

In Asia, ABS prices typically carry a premium of around $100-200/ton over HIPS prices. This is barring the extraordinary times, including the pandemic when markets witnessed a gap of over $600-700/ton, as per the historical data on ChemOrbis Price Index.

However, the premium of ABS over HIPS has evaporated lately to move below the $100/ton level and currently stands at $65/ton in China and $70/ton in Southeast Asia. As for Türkiye, import ABS and HIPS prices have been trading nearly at par since July.


Players divided on Sept outlook

As for September, participants shared divergent opinions. Some players are more optimistic about the return of demand amidst the high season. In China, the Golden September-Silver October season may promote higher manufacturing rates and help producers to work down inventory levels.

Meanwhile, buyers in Southeast Asia expect to see discounts in September, which pushed many players to the sidelines last week. They are pointing to the insufficient order entries for end products and recent slide in the energy markets.

It remains to be seen if PBOC’s monetary stimulus measures will bear fruit and boost consumer spending in China’s automotive and real estate sectors, with the property sector staging a historical downturn.

Turkish players also think that both PS and ABS may continue to receive support from costs, now that spot styrene prices in Europe surpassed $1500/ton and butadiene values hit their highest level since late May in Asia. Yet, blurry demand outlook and a possible stabilization in Asia may cap additional gains.
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