Europe ABS prices, demand likely to decline in May

23 April 2013 15:20  [Source: ICIS news]

LONDON (ICIS)--Further price drops and possible reductions in demand are expected in the European acrylonitrile-butadiene-styrene (ABS) market in May, sources said on Tuesday.

Following the €30-50/tonne reduction in April domestic prices , market participants’ thoughts have already turned to May, and further possible decreases in ABS if feedstock costs come down next month.

“I expect a drop in May,” a buyer of extrusion grade ABS said, looking at feedstock forecasts for next month.

“It is a bit early, but as always we have to look at feedstocks – what's going to happen there,” an ABS producer said, adding: “I do not have reliable information yet, but gut feeling tells me we have not reached the bottom yet, [we] might still see a downward trend”.

A spate of public holidays across parts of Europe could see demand impacted, as manufacturers could decide to take extended holidays throughout the month if end-use market consumer demand remains low.

However, this may lead to an increase in June volumes if manufacturing production is increased to make up for any shortfalls in May, a distributor said.

ABS demand has dropped off in the second half of April, following a weak first quarter due to poor macroeconomic conditions. Players are retreating to the sidelines to wait for a better picture of May raw material costs to emerge.

“Demand has really hit the limit here, people don't want to buy,” a second ABS producer said, adding: “everyone's talking about May, styrene monomer [prices], styrene monomer in Asia.”

Styrene –the main feedstock for ABS – has seen prices drop in April on the back of poor demand, with no sign of prices firming any time soon.

Imports from the US and lower-than-expected derivative demand has seen the European market lengthen, pulling prices down.

Asian producers could also put European prices under pressure, as some Asian suppliers have already started to lower prices to compete with European ABS.

A European buyer was offered prices of €1,600/tonne ($2,077/tonne) cost, insurance and freight (CIF) northwest Europe (NWE) on Tuesday, adding: “If you want materials, no problem,” as long as buyers are prepared to wait 40 days for delivery from Asia.

Price offers from Asian producers differ according to grade, with Asian offers for some specialty and high heat grades remaining uncompetitive with European suppliers.

Weak demand in Asia has caused many suppliers in the region to look to alternative markets to shift excess stock.

($1 = €0.77)

By: Matt Tudball
+44 208 652 3214

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