Home Latest News & InsightsABS ABS SHORTAGES BECOME CRITICAL IN EUROPE

ABS SHORTAGES BECOME CRITICAL IN EUROPE

December 11, 2020
The price range has widened even further, and some buyers are having to pay higher than €2,000/mt to secure volumes.

ABS shortages become critical in Europe, with buyers struggling to source material amid a worsening supply situation.

Several factors are making the market short, some of which are a strong recovery, panic buying, and a lack of imports.

Steep increases

The severe market tightness of acrylonitrile butadiene styrene (ABS) mean some players are having to accept big increases, as much as €300-400/mt.

The European ABS market has experienced a significant turnaround since the lowest point in the spring. In fact, most buyers, across all market segments, are now expecting to end the year better than in 2019.

While ABS prices in Asia have slowed down after a rally above $2,000/mt, for now the price difference between the two regions is not enough to swing back exports to Europe.

Struggling Turkish market

The worst-hit market remains Turkey, given its heavy reliance on ABS from Asia. Prices there are now exceeding €2,000/mt for many buyers.

A strong demand in Europe during December has without doubt made the market even shorter than the impact from lower Asian imports.

It is difficult at this stage to know what is driving the current strong demand. There is little doubt that activity is improving in all segments, such as furniture and toys.

Pre-buying

Furthermore, pre-buying amid rising costs and critical shortages may also explain the current strong demand.

December is usually a month when buyers lower down stocks for the end of the year accounting. But the ongoing disruptions appear to have interrupted such patterns.

It is possible that later in Q1, demand will start to slow down amid higher infections and high inventories.

And it is possible that the markets will start to return to normal later 2021.

While confidence has increased after news about vaccines, uncertainty over the second wave of the pandemic has not gone away. As such, we can expect more volatility during H1 2021.

But for now, the current upward trend in ABS prices should continue into Q1.

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