Styrenics markets open November on a bearish note in Italy and West Europe

Regional PS and ABS markets have reversed direction after two to three months of increases as November kicked off, mainly driven by lower costs. Initial offers started to emerge below October levels, while the sentiment remained clearly downbeat for the rest of the year amid weak market fundamentals across the region and globe.

Ineos pioneers PS drops

Ineos Styrolution announced its new PS prices with €120/ton decreases valid as of November 1st, 2023. However, the supplier applied slightly milder decreases than that of styrene for PS.

This is likely to gain traction as the month proceeds as suppliers have been already contemplating to preserve their margins after having failed to achieve the entire styrene hikes during September and October.

Still, participants expect to see larger decreases later as lethargic demand may weigh on prices. Plus, slowing sales in the past couple of months resulted in an accumulation of inventory, which prompted some sellers to give special prices for materials in stock in October. Volume-based discounts are also not off the table in case demand deteriorates.

ABS to follow suit

Styrene, which accounts for 58% of costs, weakened during the month, which coupled with sharp benzene drops led to a €149/ton lower monomer settlement. Despite €15/ton higher butadiene settlement, ABS costs witnessed significant drops that will be passed on prices.

There were no official price announcements for ABS at the time of writing. Sources projected decreases of about €50-100/ton on initial November offers, meanwhile.

PS sales slightly better than ABS

Consumer buying power in all derivative sectors is still fighting an uphill battle against high inflation. There has been a stronger drop in business activities during the off-season this year. However, PS demand has been faring better than ABS for some time now, sources said.

In Italy, converters in the building sector reportedly have some backlog orders to clear, which provided partial demand support for PS. They attributed this to the Superbonus scheme that was launched in 2020, providing tax deductions for expenses related to energy and seismic renovation of residential buildings.

However, it is crucial to remind that the sector cooled down after authorities moved to scale back the Superbonus amid a frenzy for home improvements. Italians can claim tax credits worth 90 per cent of any energy-efficiency work instead of earlier 110% until the end of this year.

GPPS is used in food packaging, disposable utensils, cutleries and various other consumer items. High impact PS (HIPS) is used in consumer electronics and toys, while expandable polystyrene (EPS) is used in styrofoam packaging and insulation panels in buildings.

When it comes to ABS applications, white goods and automotive sectors have seen lower than usual demand. Demand wound down in the white goods sector after a slight uptick in order entries back in summer months. June is typically a period of peak demand for ABS, which is widely used to make household and white goods, as well as in-vehicle components.

Putting that aside, November drops are not likely to stir overall buying interest for spot material towards year-end as downstream sectors are not giving any signs of recovery.

Little interest for competitive imports

Last but not least, even aggressive non-European origins do not grab interest. Import prices are rather competitive, particularly for ABS. South Korean ABS natural inj. was sold at €1600/ton DDP Italy, 90 days. In Germany, deals for the same origin and grade stood at €1550-1600/ton DDP, 60 days.

Spot ABS natural inj. ranges, meanwhile, stood at €1900-2100/ton on FD, 60 days basis in Italy and Northwest Europe.

However, many buyers have felt no incentive to buy these cargos. They avoid engaging in import purchases due to the long lead times and approaching year-end festivities. Although not widely confirmed by primary sources, rumour has it that European manufacturers may halt their operations during the festival period for longer than usual this year due to the weak end user demand. Since demand is the main issue, they prefer to buy the bare minimum from the spot market.