Will ABS markets in Europe and Asia defy lower styrene costs?
On top of an already tight market, delivery delays in the wake of disrupted railway transportation in South Germany contributed to the increases in the European ABS market as already noted in the previous Daily Headline Supply concerns mounting in Europe on transportation, logistics issues. Ineos Styrolution declared force majeure on ABS deliveries to Italy and Switzerland due to the logistical problems, which are slated to be solved in early October, though.
Similarly, China’s ABS market was on an uptrend since mid-May mainly due to the soaring upstream costs. As styrene costs have been adjusted down and demand wound down recently ahead of the National Day holidays in early October, some traders have trimmed their offers down. Asian ABS suppliers, however, maintained their firm stance as their allocations are already limited, and ACN and butadiene prices continued to post considerable hikes.
Players in Europe and Asia are currently questioning whether lower styrene costs will dominate the near-term outlook of the ABS market or they will be counterbalanced by higher ACN and butadiene prices as well as supply concerns.
In Europe, even though expectations are calling for decreases of up to three digits in monthly styrene contracts given the slump in the spot market, players’ expectations for the ABS market are stable to firm depending on tight fundamentals.
A source from a South European producer stated, “ABS prices will be stable to firmer amid tight supplies and good demand versus decreasing styrene prices. Styrene prices are decreasing due to the widening spread between styrene and benzene prices.”
Pointing to the bullish run of other feedstocks, a sheet extruder from Europe also noted, “European suppliers did not trim their initial hike requests down for September, citing rising costs and tight availability on their side. The impact of lower styrene markets may be offset by higher butadiene and ACN prices in October.”
Looking at China, the slowdown of demand appears to have gained prominence recently in the wake of the styrene’s losses ahead of the holidays while tight fundamentals and the firmer trend of other feedstock costs are expected to keep the market stable.
A trader in Hong Kong commented, “Taiwanese and South Korean producers are reluctant to step back on their offers to China given their tight supplies. However, demand has slowed down recently. Prices might hover around their current levels in the coming days.”
A similar divergence is also in place in Southeast Asia, where weak demand and styrene’s volatility might continue to put pressure on the market while others say ABS offers may defy these factors and maintain their current levels on the back of firm butadiene and ACN as well as the ongoing availability issues.
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