ABS Prices on a Downward Spiral: Impact of Weakening Demand and Surplus Supplies Globally

Acrylonitrile Butadiene Styrene (ABS) prices in the US and European markets have continued to follow a downward trend in early June 2023. Weakening demand in the packaging and automotive sectors, coupled with factors such as high inventory levels, low feedstock Styrene monomer costs, and fluctuating crude oil prices, have contributed to the recent price decline. The global economy is facing several challenges, including restrained investment, increasing debt vulnerabilities, and funding shortages, which are hindering consumer spending and creating concerns about extended below-average economic growth for June 2023.

Although there have been slight improvements in consumer and business sentiment in the US automotive sector, demand remains significantly below long-term averages, exerting minimal influence on ABS prices due to the surplus availability of inventories in the US automotive sector during this time frame. The path to a robust and sustainable global economic recovery in the United States remains uncertain. Forecasts and discussions held during the May 2023 Federal meeting in Texas suggest the possibility of a mild recession in the second half of the year. This projection, along with tightening bank mortgage regulations and prevailing tight financial conditions by raising interest rates, is expected to further impact consumer spending in the primary ABS-consuming automotive sector, amidst high inventory levels.

Conclusively, the US ABS industry is grappling with declining prices influenced by factors such as weakening global demand, surplus supplies, and fluctuating feedstock Styrene monomer costs coupled with crude oil prices. With ongoing concerns regarding the global economic slowdown and predictions of a mild recession in the US, the automotive sector, a significant ABS consumer, is likely to further impact the ABS prices.

Similarly, European ABS prices have settled on the downward side in the second week of June 2023. This decline is attributed to surplus supplies, low demand from the automotive sector, along with lower feedstock styrene costs. To avoid excess stock levels, ABS production units have been operating at reduced rates in the previous month.

According to ChemAnalyst, ABS prices are expected to continue dropping in the coming weeks of June 2023 due to an anticipated slump in new orders across the globe, declining consumer confidence, and concerns over the economic slowdown. The decrease in crude oil prices will likely contribute to this trend. Furthermore, lower feedstock Styrene monomer prices are expected to support the decline of ABS prices in the second half of the year. The persistently high inflation may prompt an interest rate hike cycle in the following month, tightening financial conditions, and worsening debt vulnerabilities.