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October Brief: Demand Increases Amid Growing Uncertainty

October 6, 2020
Demand across all markets continues to advance, albeit at a slower pace.

European polymers continue to see demand increases amid growing uncertainty about a second wave of infections in many countries. Most market segments, even the worst-hit ones, are still seeing a steady increase in activity that could continue until the end of the year. While this recovery is much slower than expected a few months ago, the trend is without doubt moving in the right direction for many players.

Polycarbonate (PC) is getting tighter every week in Europe, due to maintenance, production issues and better demand. Most sellers do not have extra volumes available and lead times are increasing. But lower costs and struggling auto sector are injecting some weakness, enough to prevent big increases in prices.

Polymethyl Methacrylate (PMMA) demand growth for protective sheets is slowing down. At the same time, a healthier Asian market, higher costs and improving demand are all lending support to potentially higher prices in Q4 from both domestic and imported volumes.

Nylon 6 (PA6) has moved from oversupply to balanced in the past few weeks. This has certainly stopped the downward trend in prices. But persistent weak demand in the auto and industrial sector is so far preventing a recovery.

Nylon 66 (PA66) has yet to find a floor on some accounts. Nevertheless, as in other engineering polymers, the weakness is slowing down because even the worst-affected buyers are recovering. A return to normality is not expected until after the first half of 2021.

Healthy styrenics markets

Acrylonitrile Butadiene Styrene (ABS) in Europe is rallying with producers looking at yet another month of widening margins. The usual arbitrage from Asia to Europe has not only closed but seems to be opening in the other direction. This is mainly to do with a buoyant Chinese market which has resulted in higher prices in the region.

Styrene Acrylonitrile (SAN) demand is normalising and is also supported by a lack of imports from Asia. There are some sectors that are still struggling, however, such as in the transport, hospitality, and cosmetics sectors.

Polystyrene (PS) has balanced out after several turnarounds in recent weeks. There is still some competition in the market, but most likely not enough to cause a fall in margins. In fact, with lower raw material costs and healthy demand, it is possible that in October producers will be able to decrease prices less than the fall in raw material costs.