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The relentless climb in ABS prices continues and shows no sign of abating.

INEOS Styrolution increases ABS prices by €400/mt in Europe for its Terluran ABS from from 1 March 2021, according to a note on its website.

The big increase reflects the recent spike in styrene monomer prices, with the contract for March increasing €500/mt.

While butadiene (BD) and acrylonitrile (ACN) increased by a smaller amount, they still contributed to an overall increase in ABS costs in March.

Moreover, the shortage of ACN in Europe continues to impact ABS producers. And the shortage of acrylonitrile butadiene styrene (ABS) has been critical for months.

As ABS prices have rallied for months, values have now reached well above €2,000/mt for many players. For some prices exceed even €3,000/mt.

On the demand side, activity downstream remains healthy across most market segments, a situation likely to continue at least until the end of H1 2021.

The PS shortage is not as bad as some other polymers but an ease in the current situation is unlikely before the end of Q1.

PS producers are sold out in February in Europe, a situation that continues since H2 2020, according to market sources.

In February, buyers were still fighting to secure volumes. With spot prices of general purpose polystyrene (GPPS) above €1,300/mt.

The high spot prices to some extent confirm the supply shortages.

A combination of good demand and production disruptions supported the recent increases.

During the second half of 2020, most players anticipated a slowdown in activity.

As such, they postponed turnarounds to Q4.

However, expectations of a weak market in Q4 failed to materialise. Demand instead continued to increase during lockdowns.

Some production glitches, such as Total in Carling, France, which now seem to have been resolved, accentuated these shortages.

As demand remained healthy throughout the second wave of the pandemic, some sellers have struggled to restock.

This situation continues in February.

What is more, since the shortages in other polymers reach critical levels, an element of panic buying is also driving current demand for PS.

Some sellers noted they cannot satisfy all the demand and have been sold out since the beginning of February.

And with oil prices breaking above $60/bbl amid supply disruptions of raw materials, it is unlikely that the PS market will experience a significant retreat before the end of Q1.

London (GC Intelligence) — Polycarbonate (PC) prices in Europe decreased €55/mt from May to June, according to GC Intelligence pricing analysis.

Prices have changed direction recently because of the virus disruptions. There were increases registered in March and April. But then prices fell in May and now again in June.

Producers are reportedly fighting for market share and are prepared to lower prices to offset the losses in volumes in some markets.

Buyers in many sectors have struggled, especially in the automotive industry. The big losses caused production for some players to ground to a halt. While there are signs that things are improving, activity remains much lower than before the start of the pandemic.

Prices also decreased because of the lower costs. While polycarbonate prices are negotiated based on demand and supply, costs still play a role in the negotiations. This is especially true when there is a big movement as it was the case in April.

However, amid much weakness, some sectors found support. Demand surged for protective sheets and other applications, such as visors, used to combat the virus. This may have eased the recent downside.

Seasonality also likely eased the downward pressure in June. In the first half of the year costs and demand tend to increase. For example, as construction is reliant on good weather, demand from the sector starts to increases in the spring.

But despite signs of improvement, the outlook is weak. The market will not see big decreases, especially now that activity is increasing and costs are on the way up. But equally a rebound is also unlikely, at least until the end of the year. Market feedback suggests that it will probably take more than a year for demand to return to 2019 levels.

The slowdown in activity in China because of the pandemic likely fuelled the trend.

Polymethyl Methacrylate (PMMA) imports to March surged, doubling compared to a year ago, according to Eurostat data in June. South Korea is the major exporter to Europe which also supplies the Chinese market. When virus-related disruptions happened in China, more volume became available for the European market.

What is more, as costs decreased in the region, import offers became competitive and supported additional sales.

PMMA imports to March surged from the region also because the good availability of the feedstock methyl methacrylate (MMA). MMA is costly to transport. When supply increases, it is often turned into PMMA and shipped out of the region.

PMMA Trade Chart to March

Therefore the slowdown in both markets probably accentuated the trend seen in Q1. However, things have changed since March and this trend will probably not continue.

Activity in China has improved and therefore demand is better. And demand has been falling in Europe, in sectors such as construction and automotive. Prices have also been falling.

As such, low demand and lower prices in Europe will have eased the pressure on imports. In fact market feedback in May and June suggests that indeed imports have been less competitive and sellers have been less aggressive to place volumes.

The ongoing pandemic caused heavy losses in demand and this was driving the current downward trend in the European POM prices.

Polyoxymethylene (POM) prices in Europe were dropping substantially in Q2. According to GC Intelligence market analysis, for some participants prices were down €200/mt or even more. It is understood that there is ample availability and sellers were trying to lower prices to increase sales in a weak market. Trading sources said some prices were offered even €300/mt lower.

Lower Demand

The main reason why supply was ample and prices were decreasing fast was to do to with the fall in demand. Demand from the major downstream sectors has plummeted in Q2. The slowdown in economic activity because of the coronavirus caused big contractions in the auto and industrial sectors, two of the major market segments for POM. But other downstream sectors also slowed down because of the pandemic. For example, construction, consumer goods and office equipment also experienced a big decrease in demand.

Higher fixed costs

Because of the lower prices, sellers were most likely experiencing a contraction in margins. But this was compounded also by an increase in fixed costs. As demand dried up, operating rates are understood to have decreased substantially. This resulted in an increase in fixed costs. However, this has also happened for other polymers, especially the ones that are used to manufacture components for the automotive and transportation industry. But the increase in fixed costs is particularly pertinent for the POM market. This is because production plants are known to be relatively energy intensive. As such, if production rates fall, fixed costs can go up very quickly.

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