Shortage pushes Europe’s ABS markets to multi-year highs

ABS markets started the year with hefty increases that were larger than the cost pass-through from styrene and butadiene. January marked the third consecutive month of 3-digit hikes. Exacerbating tightness amid the lack of Asian imports and competing demand for prompt material were cited among factors reinforcing the bullish rally.

Uptrend enters 8th month

The uptrend that has been in place since early June entered its 8th month, ChemOrbis data showed. Bullish rally gained momentum as of January, with prices rising at a faster speed with the support from both strong upstream markets and shortage of material.

According to ChemOrbis Price Index, the weekly averages of ABS extrusion and injection prices in Italy and Northwest Europe currently stand at their highest levels seen since March 2018. The weekly average of spot ABS inj. prices reached €2060/ton FD threshold in Italy and €2115/ton in Northwest Europe.

Regional suppliers issued hikes of up to €300

Sellers initially sought large increases of around €210-250/ton or €300/ton in some cases, while Trinseo announced a larger increase of €400/ton on its list prices. January hikes were larger when compared to the €108/ton hike in styrene and €55/ton hike in butadiene contracts.

Producers approached the market with noteworthy increases due to the fact that overall demand outpaced supply levels.

Converters long for prompt cargos

Suppliers failed to meet increased inquiries from irregular customers and mostly remained committed to the contractual obligations, not to mention trimmed allocations due to low stock levels. A player argued, “European suppliers struggle to meet incoming orders. There is no availability for extra volumes.”

A distributor also commented, “Our supplier only provided 50% of our regular volumes due to feedstock related production issues.”

Even if export offers out of Asia turn back up in the upcoming days, transit times are too long for these cargoes to bring an immediate relief to the supply levels. Soaring freight rates also deter players from engaging in import material. According to some participants, import flow may not return to normal until the end of Q1. That is to say, supply-demand may continue to give an upper hand to suppliers inside Europe.

Meanwhile, Europe’s ABS markets have been unfazed by a softening trend in Asia so far as a result of supply constraints as well as strong purchasing activity.

Overall ABS demand has been reportedly strong amid comments that buyers are accepting extremely high prices. Demand in the automotive industry is stable when compared to November and December, while buying interest for white goods and small appliances remained robust.

February hints at further hikes, sizes under discussion

ABS prices are expected to retain their strength in February, supported by logistics issues that may prevail until late Q1. Meanwhile, logistical hurdles are also being experienced within the bloc due to a lack of truck drivers. Delivery delays may continue to keep prices elevated.

There remains the question of to what extent prices can go up further, considering quite high levels prices reached. If demand subsides in response to sharp hikes, this is likely to keep possible increases in check.

Spot styrene increases by $130 from late Dec

Spot styrene prices rose in response to the earlier gains in the benzene market. This has paved the way for increase expectations for the next monomer settlement, although there is still a long way to go until that time.

According to ChemOrbis Price Wizard, spot styrene prices on FOB NWE basis have risen by $130/ton since late December to stand at $1055/ton.