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Styrenics markets reverse slump after months-long downtrend in Europe

by Manolya Tufan -
  • 09/01/2023 (08:53)
Regional PS markets in Europe opened the new year with hike requests after 5 straight months of drops, supported by the styrene hike. Having followed a mostly downward trend since May 2022, ABS offers also started to emerge with rollovers to some hikes.

Styrenics players have been buffeted by January hikes as they slowly return to their desks after the year-end holidays. Buyers’ reaction to the recent hike attempts will be gauged more clearly in the second week of the month, when the rest of the market will be fully back in harness.

Higher styrene encourages sellers

January styrene contracts settled with an increase of €115/ton in line with higher spot styrene values and a triple-digit hike in the benzene settlement. According to ChemOrbis Price Wizard, FOB NWE styrene prices posted a cumulative increase of more than $400/ton or 42% since late November to breach $1400/ton level, which is the highest since July 2022.

Multiple regional suppliers prefer to keep their styrene lines shut amid poor margins, while some of them think that outsourcing styrene is more plausible than producing it. A source from a regional supplier said, “Regional producers are not willing to produce styrene due to high production costs eating into their margins. If polymer demand recovers at some point, we may buy styrene instead of producing considering current spot values.”

Initial PS offers indicate 3-digit hikes

Major European PS producers approached the market with hikes of €120-150/ton month over month. Prices were on a downtrend since August 2022 before reversing direction as of early January.

According to sellers, hikes in line with the styrene contracts will pass on deals as they feel no pressure to sell. Yet, it remains to be seen whether or not initial hike requests will be fully accepted due to woes over buying interest. Some buyers hope to see slight revisions in the weeks ahead if demand doesn’t support.

ABS sees modest hike attempts

Two regional producers approached the market with €35-50/ton hikes for ABS. A supplier issued rollovers for the month, however. Despite €100/ton lower butadiene settlement, some suppliers opted for reflecting hikes stemming from styrene on their offers blaming poor margins. Plus, their order entries were reportedly better than expected considering the lingering holiday lull.

Nevertheless, players mostly expect January deals to be closed with rollovers at the end. This is because import prices would remain competitive and stagnant derivative sectors coupled with ample availability are unlikely to support hikes.

How demand will evolve?

Price inquiries remained limited as the majority of players were still away from the market. As buyers have been waiting on the sidelines and running their stocks down during most of Q4 2022, some sellers believe that some replenishment activity may be seen in January. However, purchasing volumes are not expected to be remarkable.

Players may continue to stick to their basic needs as downstream offtake will likely be modest considering recession fears. Plus, hefty PS hikes are expected to hamper demand further and add to the cautious stance among buyers.

A distributor remarked, “We think it will be a slow month in terms of sales as it will be hard to move bulky tonnages due to the hefty PS hikes.”

Export offers to nearby Turkey up by similar amounts

The spillover impact pushed prices higher in Turkey. Players reported receiving €140/ton higher PS offers, while initial ABS injection offers saw moderate gains of €20-50/ton from December levels as prices were already deemed high.

Players were expecting to see hike attempts from regional suppliers due to the visibly higher styrene settlement and higher spot values. However, no transactions could be confirmed at the time of writing.

An agent of a European producer reported, “As for PS, there is no room for discounts. Our supplier did not share any details about the supply status, though. ABS prices are also up on the month.”

Polystyrene is used in the industries of electronics, appliances, packaging, insulation, medical, and automotive. ABS is widely used in appliance housings, luggage, pipe fittings, white goods, and automotive interior parts.
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