But producers were not able to pass on the full cost increases and had to absorb once more a contraction in margins.
European Acrylonitrile Butadiene Styrene (ABS) prices increased €10-25/mt in June, according to GC Intelligence assessments. But as costs increased by a bigger amount, producers saw their margins contract further. Activity is picking up, albeit slightly and not for all sectors. Overall demand remains very weak.
Prices have lost more than €200/mt as a result of the virus disruptions. Producers lost volumes but little margins because costs of raw materials had slumped. But now that costs are on the way up, demand is not strong enough to prevent a squeeze on margins.
The market was worse during the beginning of the month. Spot offers sank to €950/mt. These prices were for both Asian imports and domestic sources. But as the Asian market improved, imports dried up and producers experienced a surge in demand. This was just enough to prevent rollovers amid such competitive imports.
While downstream markets have improved, demand remains weak as many participants are operating at 30-40% below normal capacity. Therefore, there is a strong chance that margins could suffer another squeeze in July as costs continue to stage a recovery.