An improved market environment allowed producers to pass on the entire cost increases.
European Styrene Acrylonitrile (SAN) monthly prices increased €80/mt from June to July, according to GC Intelligence price assessments. Sellers were able to pass on the entire cost increase amid improved market fundamentals.
Uneven price movements
The price movement were, however, uneven, depending on market segment and starting point. On some accounts, sellers were even able gain some margin. This is a significant change from the past few months when margins have been under pressure.
Demand across many segments has improved and allowed sellers to pass on the full cost increase of the styrene monomer.
Persistent market weakness
Nevertheless, despite the recent improvements, many markets continue to struggle to get back to pre-pandemic levels. Market feedback suggests that sectors such as construction, cosmetics, housewares and retail continue to struggle.
What is more, an element of pre-buying likely caused the increase in demand. Companies in July likely sought to fill stocks before going on holiday, also in anticipation of higher costs.
As such, if activity does not pick up in September, SAN sellers could find themselves struggling once again to defend margins.
After the big slump in costs at the height of the pandemic, SAN prices have a long way to go before reaching last year’s levels.
While the worst seems to be over, recent market developments suggest a full recovery is likely to be prolonged. Uncertainty over the virus and the economic fallout will continue to provide headwinds across many downstream markets.