Europe August ABS prices unclear on mixed feedstock trends

02 August 2013 16:12  [Source: ICIS news]

LONDON (ICIS)--The conclusion of feedstock butadiene (BD) and styrene contract prices this week left participants in the acrylonitrile-butadiene-styrene (ABS) market uncertain about August price trends on Friday.

The BD contract was settled at a decrease of €250/tonne ($329/tonne), while an increase of €47/tonne was recorded for the styrene contract. A €50/tonne rise in the propylene contract is likely to exert upward pressure on acrylonitrile (ACN) values.

Many players are away on holiday, as is traditional in August. The resulting fall in demand can present a challenge to ABS producers wishing to pass on raw material cost increases to their customers.

A producer said it would have no choice but to target increases to cover the increased cost of styrene, although it acknowledged that demand was not especially strong. The source noted that some buyers had decided to postpone their summer turnarounds in the hope of securing extra business.

Another producer said it would seek to recover margins where possible. The source observed that demand in July had been good, and said it expected August to be similar.

A reseller described a quiet market, particularly in southern Europe, and stable demand. The source suggested that Asian supply was more critical than feedstock prices in determining European market trends, and did not anticipate any price increases for August.

A second reseller said it had lost some business to competitively priced Asian imports, and noted that injection moulding grade was being offered in the low-to-mid £1,400s/tonne FD (free delivered) UK. The source said it was seeing tonnes arriving from India, but not from the US.

A compounder said that European and Asian suppliers are keen to sell tonnes to reduce their high stock levels. The source observed that demand is weak in southern Europe, and indicated price levels of €1,550-1,600/tonne CIF (cost, insurance and freight) for Asian material and €1,700-1,730/tonne FD for compounding grade of European origin.

Another compounder said buyers were resisting producers' attempts to raise prices for August.

A third compounder said that European product is available at €1,800/tonne FD, although imports are considerably cheaper, owing to weak demand in Asia. The source noted that suppliers try to avoid flooding the European market during the traditional summer lull in demand.

A buyer said the worst case scenario for August would be stable pricing, but it was expecting suppliers to offer a slight decrease given that August is an extremely slow month. The source said it was receiving attractively priced offers from Asia. A second buyer said that rollovers are a likely outcome for August.

A buyer in Turkey expected European prices to decline in August based on the fall in the BD price and a lack of market activity. The source said that white injection moulding grade is priced above €2,200/tonne FD.

($1 = €0.76, €1 = £0.87)

By: Samuel Weatherlake
+44 20 8652 3214

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