FocusEurope ABS market predicted stable for July

24 June 2013 15:47  [Source: ICIS news]

By Matt Tudball

LONDON (ICIS)--The July outlook for the European acrylonitrile-butadiene-styrene (ABS) contract is one of stability based on current feedstock styrene levels, according to market participants.

Following the settlement of June ABS domestic prices at a rollover to an increase of €20/tonne ($26/tonne), buyers and sellers believe prices for July should continue at current levels unless there is a significant shift in the July styrene contract price.

“Into July, prices will rollover, demand won't change,” an ABS producer said.

“We had a good demand level in June, and [for] July,” a buyer said following an early indication of good order volumes for July.

Some buyers were being a bit more cautious in their views of demand levels for next month, however.

Speaking about its June demand and predictions for July, one buyer said: “[We saw] good demand, there was no decrease. [We were] fearing a decrease [because of the summer holiday period] but didn't see it.”

Traditionally, July sees the beginning of the summer holiday period in some parts of northwest Europe, with southern Europe starting its vacation period in August.

During this time, both prices and demand levels tend to drop as manufacturing activity stops, picking up again in September.

Demand in some end-use markets such as from the automotive sector has not been strong in 2013 because of economic problems in Europe, but other markets such as home appliances and white goods have buoyed ABS demand levels in June.

This, together with some pre-buying ahead of the holiday period may keep demand levels steady into July.

The only area of uncertainty for the ABS market lies in the feedstock styrene July contract price.

As of last week, spot styrene was continuing its recent bullish run, but there are doubts in the market if the momentum will continue.

If styrene prices do drop, ABS buyers will likely push for lower prices in July ahead of the anticipated drop off in demand towards the end of the month.

Meanwhile, in the Asian market, styrene prices are firming, which has lead some South Korean producers to declare price increases to European buyers for material delivered in July.

One European buyer said its Asian producers have increased prices by €50/tonne FD (free delivered) Italy for July injection moulding material.

A much clearer picture of ABS July price direction will emerge once contract price discussions begin in the upstream styrene market at the end of this month following the settlement of the benzene contract.

($1 = €0.76)

By: Matt Tudball
+44 208 652 3214

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