Europe’s ABS correction gathers pace, steeper July falls loom

The European ABS market turned softer in June after producers’ initial rollover attempts proved unsustainable amid weakening market fundamentals. Transactions were concluded with reductions of up to €200/ton, while even steeper discounts were reported by some sources, particularly in the distribution channel.

Market sentiment deteriorated further as participants increasingly anticipated a sharp decline in the July styrene settlement, reinforcing expectations of another round of ABS price reductions.

Weak demand keeps buyers on the sidelines

Demand remained subdued throughout June, with many converters reporting comfortable inventory levels following the March-April pre-buying cycle. Combined with sluggish order intake from downstream sectors, this encouraged buyers to maintain a hand-to-mouth purchasing strategy and remain largely absent from the market.

At the same time, expectations of further price declines continued to discourage purchasing activity, with sellers widely reporting very limited trading volumes.

Asian imports increase pricing pressure

Aggressive import offers from Asia added another bearish element to the European market.

Asian suppliers, particularly from China, continued targeting Europe amid persistently weak demand in their domestic market, with offers below the €2000/ton DDP threshold for both injection and extrusion grades reported in some cases.

Although these levels increased competitive pressure on regional suppliers, many converters continued to avoid long-haul purchases given their comfortable inventories and expectations that domestic prices would continue to fall.

Meanwhile, reflecting suppliers’ need to secure business in a slow market, some sources reported offers for local ABS injection grades at €2100-2200/ton FD Italy.

Feedstock declines reinforce bearish expectations

Developments in upstream markets further strengthened expectations of lower ABS prices.

Alongside the €200/ton decline in the July butadiene contract, spot styrene prices tumbled by around $450/ton during June, prompting widespread expectations of a triple-digit reduction in the July styrene settlement. According to ChemOrbis data, spot prices even fell below their pre-war February lows as weak demand and ample availability continued to weigh on the market.

ABS prices to see another round of sharp drops in July

Lower feedstock costs, persistently weak demand, ample inventories and competitive Asian import offers are expected to trigger another round of sizeable price corrections in July.

Moreover, the seasonal slowdown is expected to reinforce the bearish environment, with many converters preparing for summer maintenance shutdowns and holiday closures during July and August. As a result, buying interest is expected to weaken further over the coming weeks, players concurred.

Although ABS prices have already corrected notably from their peak, much of the extraordinary rally remains intact. According to ChemOrbis Price Index data, European ABS prices surged by approximately 45-50% between late February and early May, before giving back only around 12% of those gains during the June correction. As a result, prices still remain roughly 25-30% above pre-war levels, suggesting that a sizeable conflict-driven premium has yet to be fully unwound.