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Sept expectations voiced in Europe; ABS draws rosier picture than PS

by Manolya Tufan -
  • 31/08/2020 (09:00)
After closing August on a stable to slightly firmer note, PS and ABS markets grew silent ahead of September monomer contracts in Europe. PS expectations call for a stable to softer trend, while the ABS outlook seems to be more promising amid limited imports and regional supply restrictions.

ABS performed better than PS during Aug

August PS deals were mostly closed with rollovers despite initial hike attempts beyond the marginal styrene increase. €10/ton increases were achieved only in a few cases.

Meanwhile, increases of up to €30/ton were achieved in August ABS deals, defying traditional summer lull. This was mainly attributed to the higher butadiene settlement in August, considering the ongoing pressure from the slow automotive sector.

Spillover effect from firmer ABS prices in Asia

According to many players, September outlook seems rosier for ABS as tight availability from Asia and regional shutdowns are expected to support European suppliers in their quest of hikes. Moreover, September butadiene contract already settled with an increase of €25/ton from August and demand from the household appliances sector remains healthy.

Market players in Europe continued to report that imports have been choked off as Asian ABS markets are soaring due to tightness and boosted demand. Participants also expect a boost from spillover sentiment from the bullish Asian markets, which export outlets usually track.

In the nearby Turkish market, Northeast Asian ABS natural inj. offers witnessed cumulative increases of $80/ton since early August, according to ChemOrbis data. Fresh offers from South Korea are expected to be revealed with $80-90/ton increases amid reduced allocations and soaring prices in China.

Players concur that ABS prices may follow a stable to slightly firmer trend in September. A major market participant said, “We will increase our ABS prices regardless of the monomer outcome based on the bullish Asian markets and limited regional supplies.”

Will supply limitations counterbalance low PS demand?

Some PS sellers pinned hopes on a recovery of demand in line with the return of market players from holidays and maintenance shutdowns. A trader said, “Buyers will need to replenish their stocks in September. This along with the limited availability amid Ineos’ maintenance may prop up PS prices.”

Still, overall weakness in PS demand is likely to overshadow maintenance shutdowns. Working from home reduced disposable consumption in the offices, while summer season triggering disposable demand in Southern Europe may not last long.

A distributor in the Netherlands reported, “PS demand is quite low and it is likely to slow down further in the medium term due to the single use plastic ban. Customers are switching to alternative products other than PS.”

Players see little chance for PS to rise amid unpromising demand outlook. Converters are purchasing on a hand to mouth basis amid 2nd wave fears and re-tightening measures after the fresh emergence of outbreaks. If styrene settles with drops, this will drag PS prices down as well.

Spot SM pares some of August losses

Upstream, spot styrene and benzene indicated drops compared to the beginning of August. This in turn paved the way for mostly stable to softer expectations.

Spot styrene prices reversed the course as recent as last week in response to potential disruptions on imports from the US, where the hurricane hit styrene production. Spot styrene prices on FOB NWE basis rose to $650/ton, while they indicate decreases of $30/ton from early August.

Still, styrene expectations mostly call for a stable to slightly lower outcome, with sources pointing to the fact that there is little impact from the regional maintenance shutdowns. However, a regional producer anticipated rollovers to €10/ton hikes on the monomer settlement.

Meanwhile, spot benzene prices declined $10/ton from the start of August at $440/ton CIF NWE.
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