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European ABS rebounds from 3-year low

European ABS rebounds from 3-year low2019.03.14

Source: ChemOrbis


In Europe, ABS suppliers approached the market with increases exceeding the monthly styrene hike of €60/ton for March, in an attempt to improve their margins. However, they have had to trim their hike request upon apathetic buy interest. 


ABS trend shifts on March hikes 


Although there were attempts to drive the market higher back in February, ABS prices followed a mostly stable trend. The ABS trend has shifted upwards recently as March hikes pulled ABS prices in Europe up from a 3-year low. 


According to the weekly average data from ChemOrbis Price Index, ABS injection natural prices both in Italy and Northwest Europe rebounded as of late February after they reached their lowest levels not seen since February 2016.


ABS prices lost 25% since March 2018 


Sellers were seeking large increases of up to €75/ton this month in order to recover their margins lost during most of the last three quarters of 2018. ABS prices followed a mostly softening trend since March 2018 before bottoming out in February this year, according to ChemOrbis Price Index. Data suggest that prices lost around 25% since then. 




Sellers stepped back from initial hike targets


Nevertheless, initial hike attempts proved to be unworkable so far and several distributors stepped back from their initial hike targets to concede to hikes of around €40-50/ton or smaller increases in a few cases. This was triggered by persistently slow demand and comfortable supplies.


A distributor said, “We trimmed our initial offers slightly to entice buying interest. Our stocks are still comfortable.” Demand in the main ABS applications remained slow due to the lower production in the automotive sector in particular. Uncertainties over the economic outlook and Brexit also pose an obstacle for smooth trading activities in the market.


Surging upstream poised to overshadow weak demand


Upstream, Ineos Nitriles declared force majeure on its ACN output from Cologne, Germany on February 27th due to a disruption in ammonia supplies.


Planned and unplanned production outages paved the way for tighter supplies across the board. Accordingly, spot ACN prices posted remarkable increases of $250/ton since around mid-February to be reported at $1550/ton CIF NWE.

Planned and unplanned production outages paved the way for tighter supplies across the board. Accordingly, spot ACN prices posted remarkable increases of $250/ton since around mid-February to be reported at $1550/ton CIF NWE.


Spot styrene prices on an FOB NWE basis also continued to follow an upward trend to hit their highest levels not seen since late October 2018 on a weekly average, according to data from ChemOrbis Price Wizard. 


Meanwhile, early expectations for April styrene contracts call for increases of up to 3 digits.


Another bullish month ahead in ABS market 


Although overall trading remains thin, demand is expected to improve in the days to come amid expectations to see a fresh round of hikes in April. Some buyers reported that they mull over pre-buying in order avoid paying larger increases next month. 


“Firmer April talks might lure buyers back to the market,” a trader opined


In Austria, a converter commented, “Feedstock disruptions and rising costs may reinforce the firming trend.”

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