Jan ABS deals see cost-driven hikes after 3 months of drops in Europe

Petrotahlil - In Europe, initial January ABS offers witnessed cost-driven increases following the third straight month of price drops. Although post-holiday demand has been below expectations, sellers mostly remained unwilling to step back much even for the sake of speeding up their sales.

Three-month downturn halts on Jan hikes

With the support from higher styrene and butadiene contracts, ABS sellers managed to push their offers €55-70/ton higher for January after closing the last quarter of 2019 with mainly losses.

ABS prices bucked a downtrend stretching as far back as October. Looking from a broader perspective, prices had been mostly on a downward trajectory since April-May 2019, ChemOrbis data showed.

Cost-driven hikes absorbed despite stagnancy in demand

Earlier in January, many converters were in a waiting stance after the extended year-end festivities. Players reported that the market failed to see boosted restocking activities after more players came back to their desks. Still, some buyers were open to re-stock after depleting their inventories before the year-end.

ABS supplies are also reported to be ample in general. A distributor argued, “Producers may cut production rates to keep supplies in check going forward.”

Sellers have achieved increases of €50-55/ton on their deals so far this month even if the market lacked support from the supply-demand side. Some buyers, however, expect sellers to revise their offers slightly down as the month wears on.

SM extends gains into 2nd week, Feb expectations are firmer

Spot styrene prices rose for the second consecutive week, according to data from ChemOrbis Price Wizard. They have been up by around 5% since late December.

Increased monomer demand after destocking activities in December supported spot prices in the past week.

Early voices for February also call for ABS increases due to higher upstream costs. Barring any demand destruction, producers aim to increase their prices in the first quarter of 2020. They aim to compensate for last year’s losses stemming from an ongoing sluggishness in the automotive sector.

Still, some players think that weak demand and ample supplies may counterbalance rising costs and rollovers are also within the realm of possibility.

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Source :ChemOrbis

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