Europe ABS negotiations start, double-digit rises expected following raw material surge

LONDON (ICIS)–Negotiations began this week in the European acrylonitrile-butadiene-styrene (ABS) market with players expecting price hikes, primarily due to swelling raw material costs for the month, sources said on Friday.

While the butadiene (BD) monthly contract reference price dropped by another €100/tonne, upstream monomer styrene jumped-up by €95/tonne and initial acrylonitrile settlements have increased by €65/tonne.

As acrylonitrile and styrene combined make-up roughly 70-80% of most ABS resins, raw material costs for the month have risen significantly.

Upward price pressure has also come from unexpected supply and demand dynamics, with players agreeing that demand is untypically strong for the time of year.

“Demand in November was the highest we have seen in the whole year, from our point of view, and this continues into December. [It’s the] strongest we have seen in years [and] maybe ever [for December],” one producer commented.

“In general demand is lower than October and November, but considering it is December, it’s still good,” a buyer added.

The combination of atypically stronger demand and a planned turnaround at ELIX’s plant in Tarragona, Spain, from 17 December–2 January has led to availability tightening for December.

With demand and upstream costs expected to rise in Q1 2018, some buyers said that producers could be building-up stocks for then.

Amid all of these upward price pressures, some sellers are targeting rises of up to €75/tonne, compared with November.

Buyers also anticipate double-digit rises, but at a more limited level. Depending on the grade and account, some buyers see increases of €40-50/tonne as more realistic for December.

Meanwhile, with prices in Asia firming this week following high demand in China and tightening supply, due anti-pollution measures forcing plants to reduce operating rates, most European buyers are not receiving competitive offers from suppliers based in the region.

One buyer said that prices in Asia for general purpose ABS were now above European levels.

“News I got from my Asian supplier, they are increasing [prices]. [They] want [an additional] €100/tonne for December,” the buyer commented.

As the business year draws to a close, some sellers expect demand could strengthen in early Q1, if buyers restock inventories before a planned heavy upstream styrene turnaround schedule in the global market, which is anticipated in February-March 2018.

Players from both sides of the market expect the planned turnarounds to pressure styrene prices higher, as occurred last year.

ABS is the largest volume engineering thermoplastic resin and is used in automobiles, electronics and recreational products.

Focus article by Ciaran Tyler

(Picture source: Alan Chia/Wikimedia)