European ABS Market Sees Price Stability Despite Raw Material Plant Closures

The European ABS (Acrylonitrile Butadiene Styrene) market saw a stagnancy in the first week of May 2024, as the producers are struggling to widen their profit margins in the low downstream consumption atmosphere despite lower imports and production cuts. Upstream operators reliant on naphtha have been experiencing greater margin declines compared to competitors utilizing liquefied petroleum gas or imported ethane.

In the European market, Trinseo has already closed its styrene units in Germany and the Netherlands. Similarly, Indorama and BASF, along with other producers, are considering the closure of their upstream units due to low profitability and intense competition. They plan to stop feedstock production in Europe and opt to import them from Asia instead. The closure of upstream plants in the European region has notably decreased ABS production rates and limited supplies during this period.

From the demand perspective, the stagnant downstream automotive demand for ABS due to sluggish economic conditions has played a significant role in the unfolding situation in the Eurozone. Uncertain demand forecasts indicate further results in the plant closures and surge in the ABS price trend, although some downstream players were cautious about factors such as the Red Sea crisis and longer transit times from Asia and the Middle East may somewhat delay this process. While total retail sales in the downstream home appliance industry experienced a slight increase month over month, rising marginally compared to March 2024. Thus, this showed stability in the ABS demand from the downstream segment for the time being.

Furthermore, there has been a notable shift in the purchasing behavior of European ABS buyers, who have increased their procurement from the import market in recent years. European customers used to be more conservative in their procurement strategies, favoring contracts.

In conclusion, ABS industry players expressed negligible concern about a tighter supply outlook, as any shortfall is expected to be filled through imports, given the surplus capacities in global markets and the competitive advantage they provide. Integrated producers with access to cost-efficient feedstocks outside of Europe are anticipated to export ABS to the region. Several participants mentioned receiving offers for ABS from plants in the United States.

Moreover, the production activities in the EU will undoubtedly decline. The EU will turn to Saudi Arabia and the United States for ABS purchases.

As per the ChemAnalyst, projections for May indicate that ABS prices are expected to stabilize after a consistent upward trend, with forecasts suggesting that feedstock Styrene prices will remain stable to slightly softer. Demand is expected to continue focusing on essential needs, while the supply outlook remains unchanged.