LONDON (ICIS)--Acrylonitrile-butadiene-styrene (ABS) producer Styron’s €50/tonne targeted increase for February is very ambitious in light of current demand, market sources said on Friday.
Swiss-based Styron announced an increase in a press release earlier in the week, following the €17/tonne rise in the feedstock styrene February contract price, and a a €35/tonne increase in the butadiene (BD) February contract price.
The increase will take advantage of the good demand the company has seen in January and into February, while allowing the company to recover lost margins from 2013, a company source said.
A second ABS producer said last week ahead of the styrene settlement it will look to increase prices in line with the monomer cost.
Acrylonitrile (ACN) February contract negotiations are expected to follow the feedstock propylene cost development, which settled at a rollover for February, although negotiations remain at an early stage.
Reaction from the buy side indicated many felt a €50/tonne increase was too much because demand was stable and the market is well supplied.
“I don't think [Styron can implement a €50/tonne increase] to be honest,” a buyer said, adding: “It's a very ambitious target to get a better price than the feedstock.”
The buyer went on to say it felt an increase of €5-10/tonne above the combined cost of the raw material increases would be more realistic.
“[There is] not a change [of a €50/tonne increase] in the market right now,” a distributor said.
“We expect to close contract more or less in line with raw material [increase]. I assume € 20-30/tonne up on ABS,” it added.
European producers may come under pressure from Asian suppliers to revise initial targets in coming weeks. Asian suppliers have been largely absent from the European market in January and so far in February because of the Lunar New Year holiday period.
However, as Asian suppliers return to the market, and if Asian demand fails to pick up post-holiday, there may be more competitively-priced Asian offers heard in Europe in coming weeks, leading some European producers to lower targets in order to sell volumes.