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Weak demand sends Türkiye’s styrenics markets to multi-month lows

by Merve Madakbaşı -
  • 17/11/2023 (02:55)
ChemOrbis data suggested that import PS, ABS and EPS markets have been dragged down to their lowest levels since July-August on a weekly average basis in Türkiye. A cocktail of lackluster demand, comfortable supply and receding upstream chain put a strain on prices, not to mention economic headwinds that took their toll on consumption in derivative segments.

CIF Türkiye – Import Prices– PS – ABS

Import PS prices hit their lowest levels since August

PS prices reached their peak level and headed downhill in early October, while ebbing demand and falling styrene prices across the board have kept the market bearish since then. Offers extended their losses into November as activity showed no signs of recovery while the persistent cash constraints and low season kept purchases tied to needs on the side of converters.

Asian offers tracked spot styrene prices in the region lower, while South Korean GPPS and HIPS prices on CIF Türkiye basis have slumped by $80-90/ton (6%) since early October.

European PS prices posted triple-digit decreases in November as falling styrene prices coupled with the pressure from competitive Asian cargos weighed on sellers, let alone the impact of weak demand within the bloc. Spot styrene prices have plummeted by $200/ton (17%) on FOB NWE basis in the last six weeks.

Apart from inflationary pressures, waning demand for imports can be attributed to bulky purchases in Q3 2023. Türkiye’s PS imports in the period spiked by 95% to above 40,000 tons compared to the corresponding period in 2022, leading to poor demand in early Q4.

ABS natural prices break below $1450/ton CIF threshold

Türkiye’s ABS market followed a bullish trend after bottoming out in mid-July this year. Nonetheless, import prices reversed course around one and a half months ago, with the market yielding to flagging demand amid tight liquidity and slow derivative consumption.

Like PS, activity for ABS wound down following a large gain in Q3 imports, which showed a notable increase of 45% year over year and stood at around 41,000 tons.

South Korean ABS natural injection prices broke below the $1450/ton CIF Türkiye mark this month following gradual discounts from the $1500/ton peak of early October. Prices were assessed at their lowest levels since August this week.

EPS sees no respite from drops for 2nd straight month

EPS prices recorded triple-digit drops in November as comfortable supply coupled with the end of peak season weighed on sellers. Sliding styrene contracts in Europe pushed most Turkish buyers to the sidelines, most of whom had sufficient stocks on hand owing to their previous purchases from the local or import markets.

EPS imports surpassed 10,000 tons in Q3, as per data from ChemOrbis Import Statistics. The figure not only indicated a 37% increase from the previous quarter but also pointed to the highest Q3 volume since 2020.

Domestic EPS prices for November were assessed $180/ton lower compared to the previous month. According to the monthly average data from ChemOrbis, prices dipped to their lowest levels since July following the latest round of price cuts. Players pointed to competitive Iranian cargos as another factor to contribute to the bearish trend in the local market.

What lies ahead amid volatile costs, murky demand outlook?

In the short term, styrenics are expected to remain under pressure from the unpromising demand outlook amid cash flow problems and the low winter season. Players believe that PS, ABS and EPS prices still have some room to move down in December due to traditional depleting activities. Nonetheless, decreases may slow down now that all markets have hit their lowest levels in months and sellers are suffering from squeezed margins.

A trader commented, “Prices seem to be nearing the bottom for all products. Global producers have been complaining about their poor margins while they mull over reducing their operating rates to hedge against further losses.” Prices may stabilize and shift direction by the new year, although bleak demand scene across the board may keep upside limited in the medium term.

Disposable manufacturers maintain their bearish expectations for next month, with some of them saying, “End-product demand has not recovered amid poor exports to Europe. We plan to keep our run rates reduced due to low orders.” An EPS buyer voiced his expectation to see $50-100/ton drops next month, adding that he had no plans to stock up.

Meanwhile, industry players are set to meet at Plast Eurasia Istanbul 2023 next week. They will keep a close eye on the upstream chain to get a better clue about sellers’ potential December pricing as well as the trajectory in Asian and European styrenic markets.

In upstream, spot styrene prices in Europe stood at around $950/ton FOB NWE on a monthly average, as per ChemOrbis data available at the time of press. This was compared to the August peak of $1515/ton. In Asia, prices have hovered around $1050/ton FOB South Korea for more than a month now amid fluctuating crude oil futures.
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