European, US ABS Market Navigates Supply Relief Amidst Upstream Cost Fluctuations

The European ABS (Acrylonitrile Butadiene Styrene) market witnessed a marginal rebound in April 2024. It appears that prices have continued to rise into the second half of April, with a consistent increase in the feedstock Styrene prices. Some of the European ABS suppliers have already proposed increases matching the monomer hike to recover margins. However, US ABS prices stabilized and expected the show a dip along with ease in the upstream cost pressure.

In Europe, two leading styrene producers, TotalEnergies and LyondellBasell, are preparing to terminate force majeure declarations on styrene by the latter half of April, improving supply constraints across the region and indicating further stabilization the ABS market players’s margins.  LyondellBasell's Maasvlakte facility, with an annual styrene production capacity of 680,000 metric tons, stands as the largest styrene manufacturing unit in Europe. On the other hand, TotalEnergies' Gonfreville site produces 600,000 metric tons of styrene annually, making it the second-largest production site in Europe.

As a result of supply cuts during the first half of April 2024, the diminished output of styrene from both facilities has exerted high-cost pressure on the European ABS market. The price of Styrene monomer exhibited an 11% increase along with the inclination in the upstream crude oil prices in the week ending April 12, 2024, affecting the prices of ABS in parallel.

On the other hand, ABS prices in the US market were stagnant as a result of ease in the upstream costs and stability in the feedstock Styrene prices during this timeframe in the line of adequate stock availability.

Consequently, oil prices experienced a 3% decline in settlement this week, driven by several factors including an increase in U.S. commercial inventories, disappointing economic indicators from China, and developments concerning aid bills related to Ukraine and Israel in the United States. Brent futures for June concluded the day down USD 2.73, equivalent to a 3% decrease, reaching USD 87.29 per barrel. Simultaneously, U.S. crude futures for May settled at USD 82.69 per barrel, marking a decline of USD 2.67 or 3.1%, representing their most significant drop since March 20. Throughout the week, oil prices have shown a tendency to soften as economic challenges hinder the potential gains arising from geopolitical tensions. Additionally, market attention is focused on Israel's potential response to Iran's recent weekend attack.

As per ChemAnalyst, ABS prices are likely to stabilize in the Eurozone and the USA, as negotiations continue and market dynamics evolve, market participants are closely watching for further developments in the ABS market, especially regarding demand recovery and margin stabilization amidst stable upstream price trend and resumption in the production rates.