Benzene uncertainty clouds ABS December price expectations

29 November 2013 16:43  [Source: ICIS news]

LONDON (ICIS)--Players in the European acrylonitrile-butadiene-styrene (ABS) market are waiting for the outcome of the December benzene contract price discussion to allow them to draw conclusions about next months ABS price direction, market sources said on Friday.

Firming spot values throughout November were putting significant upward pressure on the European benzene market ahead of December.

The December styrene contract price is expected to settle at a rollover to small increase, but ABS players were reluctant to speculate on the size of any upward movement until the benzene contract is confirmed.

“Ten days ago we thought a decrease [for styrene], now benzene is shooting up like a star,” one ABS buyer said.

Styrene margins have been strong over recent months, with styrene suppliers expected to absorb a fair amount of any rise in benzene rather than passing large increases through to downstream markets including ABS.

December butadiene (BD) has settled at a rollover, but with the December propylene contract price increasing by €30/tonne, ABS feedstock acrylonitrile (ACN) prices are expected to mirror the rise in propylene.

Most ABS players expect ABS prices for December will remain stable even if styrene increases, because of the traditional seasonal slowdown in demand over the Christmas period.

“BD settled at a rollover. I hope ABS will be stable into December,” an ABS producer said.

“Styrene demand is relatively weak. If styrene would increase a little bit, we dont expect a high impact on [ABS prices],” a second producer said.

It would be very hard for ABS suppliers to push through an increase in December, a buyer said.

“[December] is generally a very weak month, very difficult to move up price, almost impossible. Possible in January, though,” another buyer said.

Demand levels on the buy side appear mixed across Europe. Southern European ABS compounders have seen good demand in November and expect this to carry through to the shorter month of December.

By contrast, some players in northwest Europe have seen demand drop off towards the end of November ahead of the quiet year-end period.

One buyer of extrusion grade in northern Europe said it had good demand, however, because of a large order placed by one of its customers.

Producers are seeing demand levels in line with expectations ahead of year-end. One producer commented that September and October were particularly strong months, and November and December demand will be lower in comparison.

A second producer said November was one of its strongest months in terms of demand from Italy, although it was not able to pinpoint what was driving demand in the country. It was also satisfied with the demand seen from eastern Europe.

By: Matt Tudball
+44 208 652 3214

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