The ongoing pandemic has caused logistics issues and weakened fundamentals. Both are headwinds for the projects.
Acrylonitrile Butadiene Styrene (ABS) producers postponed plans to complete new production projects. The delays are due to the disruptions caused by the coronavirus pandemic, according to very reliable sources. INEOS Styrolution and Versalis had plans to increase production in Italy and France; 30,000 metric tons per year and 50,000 metric tons per year respectively.
INEOS Styrolution’s plant, located in Wingles, France, is now scheduled to start production at the end of the year. The plant replaces polystyrene production at the site. Meanwhile, Versalis plans to start the new production at the beginning of 2021.
The coronavirus pandemic has thrown some obstacles in the way of the two projects that were originally planned for earlier in 2020. First, the ABS market during the past few months performed poorly because of the slump in demand due to the pandemic and subsequent lockdowns. There is little to gain and much to lose by bringing additional production in a severely weakened market.
But besides market conditions, practical factors were the main reasons that disrupted the two projects. The rapid increase in infections and subsequent lockdowns created logistics issues that to a certain extent continue. Therefore, regardless of market conditions delays were probably unavoidable.
Nevertheless, the ABS market in Europe is becoming more stable. Demand remains weak but is improving as economic activity increases. This trend will probably continue until the end of the year. By then there is a good chance that the ABS market in Europe will be strong enough to absorb the extra volumes without putting too much of a burden on supply.