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September hikes meet resistance for ABS in Europe

by Manolya Tufan -
  • 16/09/2019 (10:26)
Two European producers approached the market with increases following higher styrene and benzene contracts for September. However, some buyers are bidding for smaller increases or even rollovers as many buyers are refraining from replenishing stocks amid poor performance of the automotive industry.

Ineos and Trinseo pioneered September hikes

According to statements on the companies’ websites, Ineos and Trinseo announced respective increases of €35/ton and €40/ton on their September ABS offers.

Their policy followed €59/ton higher styrene and €83/ton higher benzene contracts for September in Europe.

In the distribution channel, sellers applied smaller increases on their offers while the majority of them shared their intentions to keep prices flat from last month due to the state of demand.

A compounder commented, “It is usually the high season in September; however, demand remained below expectations this year.”

Competitive imports add to pressure

In the import market, competitive offers from Far East Asia are exerting pressure on local prices and intensifying competition among sellers. The prevailing import price ranges are standing well below the local prices while some deals were already closed at unchanged levels from August.

Upstream disruptions fail to provide support

Spot styrene prices posted no major gains despite two major maintenance shutdowns in the region.

Ellba, a JV between Shell and BASF, is set to shut its propylene oxide and styrene monomer plant (POSM) with a production capacity of 550,000 tons/year in Moerdijk, the Netherlands from September to November due to a planned maintenance.

LyondellBasell and Covestro’s jointly owned 680,000 tons/year Maasvlakte POSM unit in the Netherlands will also be shut from mid-September until mid-November.

Moreover, Trinseo’s 500,000 tons/year styrene plant was shut due to technical issues by late August and the unit was slated to remain shut for 3-4 weeks.

Spot ACN prices posted cumulative increases of $100/ton in the past two weeks on the back of tightness, meanwhile.

Overall ABS supplies have remained ample so far as opposed to the previous expectations that upstream shutdowns might lead to reduced ABS output.

Buyers push for rollovers

Not only sluggish end markets but also pre-buying activities in the past two months have reduced fresh buying appetite for ABS lately. According to some players, the ABS market is at a standstill with buyers having little incentive to purchase other than bare minimum needs amidst the foggy October outlook.

Therefore, players think that September hikes might not be absorbed owing to the weak supply-demand conditions as some buyers are already pushing for rollovers in deals. Sellers are expected to revise their offers down in the following days, although some may stand firm on their offers to preserve margins.
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