Will European PS, ABS track divergent paths for another month?
The PS sentiment weakened further following the lower styrene settlement. Yet, regional ABS producers are believed to push for further margin expansion as stable to slightly firmer voices emerged.
PS hints at a stable to softer trend for 2nd straight month
The stable to slightly softer trend for PS is likely to continue in October. Ineos Styrolution announced its PS prices for October with rollovers, while other producers’ announcements were not revealed at the time of writing.
Some suppliers aim to recover their margins, pointing to the fact that they received higher order entries for October as overall supplies declined due to the maintenance shutdowns at PS plants. PS plants will be shut until mid-October, sources remarked.
Still, the €33/ton drop in the styrene contract coupled with sufficient stock levels on the buyers’ side weighs on the PS market.
Participants closely track how packaging demand will be affected by the imminent plastic tax, which could tip the balance in either direction for the near-term. Still, anti-plastic movements keep the medium-term outlook for single-use items murky.
A food packager reported, “We reduced rates in line with fading demand. Apart from low season for our applications, we noticed that order entries are below 2019 amid COVID-19 related uncertainties. There is a lack of visibility for the short term, we buy what we need.”
ABS awaited stable to firmer
Meanwhile, regional ABS producers are believed to push for further margin expansion during October by not passing lower styrene onto their offers. Higher butadiene settlement will counterbalance lower styrene settlement and pave the way for rollovers on ABS, according to the majority of players.
Some players even anticipated further increases on the back of ABS tightness across the board. The bullish trend of ABS may be extended into the 5th month in a row albeit at a slower pace, they argued. Apart from low availability, resurgent demand in the automotive and home appliances sectors may continue to support ABS prices.
No immediate supply relief foreseen for ABS
Import volumes have been choked off with a closed arbitrage window to Europe and uncompetitive prices. Several players concurred that European prices failed to catch up with the pace of gains in Asian markets.
Fewer imports from Asia are likely to arrive in Europe considering overall ABS tightness and long lead times. A few sources commented, “Asian cargoes may start to arrive again in Europe in January-February 2021.”
Moreover, regional ABS supplies are not expected to return to normal following the end of maintenance shutdowns by mid-October.
Demand outlook under shadow of rising case numbers
Rising virus cases kept buyers on their toes as there is little incentive for replenishing stocks, which prompts converters to stick to needs only purchases for some time now.
Several countries imposed new restrictions as case numbers surged across the continent. Players reported that imposing partial lockdowns in the highly infected areas would eventually affect end markets.
PS market appears to be under a more visible pressure when compared to ABS. The lack of support from the demand side may push sellers to concede to discounts, as was the case in September.
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