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TRADE DROP: ABS EU27 Trade Shrinks in April

July 23, 2020
The height of the pandemic caused disruptions and led to a fall in overall trade. But this pattern could change again.

Acrylonitrile Butadiene Styrene (ABS) trade decreased in April for the EU27, according to recent Eurostat data.

The data shows that from January to April volumes for both import and exports were lower in 2020 compared to 2019.

The decrease in April trade was most likely is to do with a reduction in demand and logistic issues, both caused by the coronavirus pandemic.

A number of big countries in Europe were in lockdown in April. This caused demand to decrease. It also fuelled worries over logistic issues which led to buyers to rely less on imports.

Moreover, during the same period exports also decreased, which is most probably also related to the same market disruptions.

Europe is a major importer of ABS

Europe is a major importer of ABS, the bulk of it coming from Asia, particularly South Korea.

At the beginning of the year, there was a strong presence of import volumes in Europe, which accelerated during the start to the virus outbreak in China.

However, when infections eased in Asia but spread in Europe, there was a reverse in trade patterns.

Better demand in Asia and better prices meant less volumes available to Europe. Moreover, as the pandemic continues, these logistic issues persists and continue to impact trade.

The last month, market participants noted a rather acute absence of ABS from Asia. This has enabled European producers to increase prices in line with costs and in some cases even increase margins.

ABS margins have been under pressure for quite some time. The slump in costs in April helped to restore the gap which sellers are keen to maintain.

However, it remains to be seen whether this is just a temporary pandemic-related anomaly or whether this pattern will persist throughout the year.

The reduction in imports is also to do with a gap in price levels between the two regions. Europe price have dropped considerably and are now gaining ground. Once that gap closes, then imports could increase again as they become more competitive.

The recent increase in the value of the Euro against the US dollar will support this potential change in the trend.

What is more, as demand continues to increase in Europe, importers will be keen to take some of that share.

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