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Turkey’s ABS markets skyrocket amid tightness

by Merve Madakbaşı -
  • 04/12/2020 (04:05)
ABS prices in Turkey followed a firming trend in H2 2020. The market was influenced by China, where robust demand sent prices to their highest levels since ChemOrbis started to compile data in January 2008 last month. Yet, Turkey had lagged behind the global rally until December.

Bullish trend sped up in mid-November due to dwindling supply

An increasing number of players reported having hard time procuring their needs. A mounting tightness in Asia and Europe was to blame as steeply higher shipping costs and container shortage added to the situation.

“Vivid buying appetite and tempting netbacks caused ABS sellers to direct their cargos to Asia instead of Turkey,” opined a participant. Furthermore, some European producers conducted turnarounds at their plants starting from autumn which reduced availability further.

ABS yielded to larger hikes in global markets

Turkey traded below China’s import market as long as from mid-May to late November. Prices were under an intensifying pressure as the discount of Far East Asian ABS cargos in Turkey to China widened to as high as $310/ton in mid-November.

This already boosted expectations for hefty increases from main suppliers of Turkey, with massive increases coming not long after higher butadiene and styrene contracts in Europe. An agent of a West European major revealed record-high increases of €600/ton, saying, “We will be able to provide very limited volumes for another month.”

As for Asian origins, a trader was still waiting to receive fresh offers from his South Korean supplier amid a scheduled shutdown at its unit that started late last month. Another player reported to ChemOrbis, “New Korean ABS natural offers initially came at $2800/ton CFR Turkey, while we expected to shake hands with $50/ton discounts.”

Import volumes declined in October after steadily rising during Q3

According to ChemOrbis Import Statistics, Turkey’s ABS imports dropped 8% in October month over month following steady gains in June-September.

Waning prompt supplies pushed the local market to a decade-high

Sharply higher replacement costs prompted distributors to lift their offers successively over the last weeks. According to ChemOrbis Price Index, the locally-held ABS market has touched its highest level on a weekly average since June 2011 as of this week.

“A few sellers started to test as high as $3000/ton ex-warehouse Turkey, not inc. VAT as they are about to sell out their materials on hand,” said an ABS buyer.

Players question sustainability of bullish run

On the side of demand, sellers enjoyed healthy buying interest from their customers over the last few months. “Demand for hygienic dispensers and electrical devices have been active amid the 2nd wave of COVID-19 pandemic. Yet, large consumers may take a waiting stance in response to massive increases in raw material prices,” players noted.

Some players, meanwhile, approached the latest round of hikes with skepticism. They pointed to a mixed view in Asian ABS markets with recent losses in spot styrene prices on one hand and troublesome logistics on the other one. Spot styrene prices on an FOB South Korea basis slipped more than 17% ($203/ton) from mid-November, data from ChemOrbis suggest.

“It became increasingly hard to afford raw material and reflect rising costs onto end product prices. We have doubts that the market can digest any further gains in the longer run,” a Turkish ABS consumer opined.
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