London (GC Intelligence) – Styrene Acrylonitrile (SAN) prices are expected to increase in March. Higher costs are the main reason for the increase. At the same time, market fundamentals remain weak.
The increases in March are based on higher prices of styrene and expected higher prices of acrylonitrile. While demand and supply impact prices negotiations, they have a minor influence. Price negotiations are mainly based on costs. With the current upward momentum in both the main feedstocks, March prices are set for another hike. This will follow the increase in February. As costs increase amid weak fundamentals, producers could experience a squeeze on margins on some accounts.
A recovery in demand in Asia appears to have stalled. The overall market weakness in Europe was primarily to do with a slowdown in China and Asia. There were hints that demand was recovering as participants were preparing for a pickup after the Chinese holiday at the end of February. The markets instead have been subdued after the Chinese holiday. With a weak Chinese market, it is difficult to see how Europe will rebound in 2019. As Europe slows down and worries over tariffs persist, SAN demand is set to stay low and will certainly continue to threaten producers’ margins.
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