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Strong costs overshadow weak demand, pushing Asian PS, ABS markets to multi-month highs

by Thi Huong Nguyen -
  • 15/04/2024 (02:05)
A continuous upturn has mostly dominated PS and ABS markets across Asia since late December 2023. During the week ending on April 12, rallying energy prices substantially pushed upstream costs upward and underpinned fresh hikes in styrenics markets. Adding to the scenario is the cautious improvement in buying interest, although the overall state of demand has remained stagnant.

Styrenics markets reached highest levels in over a year

PS prices on a CIF China basis saw renewed increases of $20-40/ton, while import prices in Southeast Asia rose by $10-40/ton. According to weekly average data from ChemOrbis Price Index, prices of GPPS and HIPS inj. on a CIF China basis climbed to their one-and-a-half-year highs, while both grades hit their highest levels since January 2023 in the import markets of Southeast Asia.

As for ABS, CIF prices across the region were assessed stable to $30/ton higher when compared to the previous week. The weekly average prices of ABS inj. both on CIF China and SEA were likewise hovering around their peaks since October 2022, according to ChemOrbis data.

Inside China, local suppliers also opted for rollovers to additional hikes of up to CNY150/ton ($21/ton).

SM at nearly 7-month high, BD rose by 50% since late Dec

Brent crude oil futures have experienced some fluctuations over the recent settlements, but the benchmark level has still hovered around the $90/bbl threshold for another week. The oil rally has fueled a strong trend in key feedstocks of PS and ABS materials, particularly styrene and butadiene monomers.

The latest data obtained from ChemOrbis Price Wizard suggests that spot styrene prices were stable at a roughly seven-month high of $1160/ton CFR China. Meanwhile, spot butadiene prices maintained their highest levels since mid-July 2022, at $1450/ton on the same term. Butadiene prices recorded cumulative increases of $500/ton, or nearly 53%, over the past three and a half months.

The gains in PS and ABS markets mainly came on the back of bullish feedstock prices, with most producers attributing cost pressure to their firmer pricing. “Sellers’ offers remain firm in light of robust cost support, although transaction volumes are limited. The short-term markets are expected to stay on a firm note,” said a source at a Taiwanese producer, who applied price hikes of $20/ton to its PS offers for both China and Southeast Asia.

Higher offers lured buyers back into the market

The rising prices of PS and ABS encouraged some buying enthusiasm among downstream converters to hedge against further increases. Meanwhile, low inventory levels at several warehouses also stayed behind the cautiously improving demand.

A trader based in Wanchai reported, “Producers have still been under cost pressure. This, combined with increased buying interest, has recently boosted market sentiment.” In the meantime, a Vietnamese producer’s source opined, “Currently, buyers have low inventory, so they will restock despite high prices.”

However, the demand side was yet to provide full support for the ongoing upswing in the styrenics markets. Higher prices indeed resulted in more active buying activity, but it remained at replenishment rather than stockpiling due to underperforming downstream sectors. In addition, the series of holidays in Southeast Asian countries also dampened the market trading atmosphere lately.

Given lingering weakness in demand and high levels, buyers’ resistance might grow at some point, mitigating the cost push and hindering additional hikes. The Wanchai-based trader highlighted, “The risk of high prices is increasing, so short-term markets are expected to fluctuate following the recent upturn.”

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