Asia's PS, ABS markets back in bearish mode after brief rebound

Asian PS and ABS markets experienced a brief upward trend in the latter half of June, driven by a strong cost push amid geopolitical tensions between Iran and Israel. However, this bullish momentum quickly faded in early July as upstream support weakened, and underlying supply-demand imbalances began to exert pressure on prices. According to ChemOrbis Price Index, PS prices largely reversed previous gains, while ABS prices showed more resilience.

Recent upswings prove short-lived

Since July 2024, import PS and ABS prices in Asia have largely followed a downward trajectory, with sporadic and brief increases lasting no longer than one to two weeks. These temporary price upticks were primarily driven by volatility in upstream crude and key feedstock values rather than any substantial improvement in demand, highlighting the fragility of market sentiment.

ChemOrbis Price Index data reveals steep annual declines in PS prices, with GPPS injection offers on CIF China falling by about 19% year-on-year, and HIPS injection prices dropping by 17%. Southeast Asia saw similar declines of roughly 16% for both grades during the same period. In contrast, the import ABS markets experienced milder losses of 8-11% from the previous year.

The domestic PS and ABS markets in China mirrored this pattern. Despite some momentary rebounds over the past year, price increases could not be sustained amid an entrenched atmosphere of caution and limited downstream appetite.

Off-season, macroeconomic conditions challenge demand

Seasonal demand lull weighed heavily on styrenics consumption across Asia. In China, converters in key end-use sectors such as packaging, home appliances, and electronics were scaling back purchases amid the off-season. “It’s clearly off-season. Demand from appliances and packaging is very low right now,” a source from a China-based producer remarked, reflecting the lack of urgency among buyers.

In Southeast Asia, macroeconomic uncertainties further deepened the stagnation of demand. Vietnam’s newly implemented tax regulations, along with delays in customs clearance procedures and ongoing depreciation of the VND, made buyers more hesitant. As a result, many importers kept limiting purchases to need-based quantities while monitoring the market for further price reductions.

Malaysia presented a similar picture, with buyers adopting a wait-and-see stance amid ambiguity around SST (Sales and Services Tax) procedures and high availability. “There’s too much uncertainty around tax. We’ll wait and see how things go,” noted a Malaysian converter. The resulting buyer inertia has made it difficult for sellers to seek further hikes, especially with upstream cost support also showing bearish signs—including decreased crude oil futures and lower spot styrene prices.

Ample supply in China adds another layer of weakness

Adding to the scene was abundant supply in China, serving as a key pressure point for both PS and ABS markets. According to market sources, domestic inventory levels remained high, as polymerization plants maintained relatively stable output levels despite lackluster demand. Even though some producers have reportedly reduced operating rates, the oversupply situation persisted.

The supply glut, combined with sluggish domestic demand, might potentially prompt Chinese suppliers to explore opportunities for export—particularly to nearby Southeast Asia. This might result in increasing volumes of competitively priced Chinese cargoes being redirected to the region, putting additional pressure on local and regional suppliers.