London (GC Intelligence) — European Styrene Acrylonitrile (SAN) prices in April increased €75/Mt, driven by higher prices of raw materials.
The increase was in line with cost increases, with little room for producers to improve margins.
While it is harder for producers to increase margins when costs increase, weak demand and competitive imports placed even more pressure on margins.
The market environment in April was challenging and will likely remain this way for the rest of 2019, consistent with the expected slow growth in the global economy.
The increase in April succeeded a smaller increase in March, broadly following seasonal trends. The driver of SAN prices in April was the increase in the main feedstock styrene which moved up just short of €100/Mt from March.
SAN downstream markets include, white goods, household appliances, kitchenware and the construction sector. Demand during the spring season tends to pick up particularly from the construction sector.
Europe is a net importer of SAN, with most volumes coming from South Korea. Imports have become very competitive lately, a result of weak fundamentals in Asia.
This situation of weak demand and competitive imports will likely persist for the next few months.