Home Latest News & InsightsABS ABS: BAD START TO SEPTEMBER


September 17, 2019

LONDON (GC Intelligence) — Acrylonitrile Butadiene Styrene (ABS) demand in Europe has failed to pick up after the summer holidays. September so far has been no different than the poor conditions experienced throughout this year.

After a subdued summer, sellers were waiting for the usual seasonal increase in activity. But with ongoing market uncertainty and worries over crude oil prices, everyone is in a wait-and-see mode.

Crude oil prices soared after the attack on oil facilities in Saudi Arabia. The spike was a result of worries of shortages and a potential conflict involving the US which could prolong supply disruptions in the region.

After the attack Brent oil futures had reached just above $70/bbl before retreating and currently trading at around $67/bbl.

Worries of a major conflict in the region injected further uncertainty on an already poor global economic outlook for the rest of 2019.

Moreover, higher oil prices pushing up costs in a period of low demand could mean further decreases in margins for producers.

Indeed, producers in September experienced another month of margin contractions. They seem to be unable to pass on the increase of around €30-40/mt of raw material costs.

According to GC Intelligence analysis, it seems that rollovers or small increases of around €10/mt is what the market can bear at the moment.

Looking further ahead, October and for the rest of the year, prices should weaken in line with seasonal trends. 

The recent spike in oil prices has thrown doubt on the likelihood for benzene and styrene to fall in the coming months. Should the situation in the Middle East worsen and cause costs to increase in the coming months, ABS producers will be looking at a very difficult end of the year.

Demand has not changed much in the past few months. Automotive remains very weak, followed by construction and household goods. Electrical and electronics which has been resilient until recently is also showing weakness.