High Feedstock Cost Supports the Rising ABS Price Across the Globe
- 05-Sep-2023 5:37 PM
- Journalist: Nicholas Seifield
The prices of Acrylonitrile Butadiene Styrene (ABS) are experiencing an upward trend globally in the second half of the year, mainly due to limitations in supply and a spike in the costs of crucial raw materials, Styrene and butadiene, as observed in the first week of September 2023. Market players have chosen to proceed cautiously to maintain their margins across various regional markets. To summarize, the polymer price escalation resulted from dwindling inventory levels amidst reduced production rates and supply shortages coupled with leveling up upstream material costs, all within the context of unchanging demand fundamentals.
In Europe, the ABS prices increased in the first week of September 2023, as the regional players have been gradually returning from long summer holidays and opted for cautious pre-buying activities ahead in September. The spot ABS market reversed direction after a prolonged downtrend as the downstream automotive sector showed signs of revival, and the ABS market driving forces will primarily revolve around the surging feedstock styrene and Butadiene costs and macroeconomic influence on the demand fundamentals as the regional economy showed modest growth in the line of steady inflation.
The US ABS prices also surged marginally in the first week of September 2023, owing to the rising uncertainties in the production run rates amidst supply disruptions caused by Hurricane Idalia. Moreover, the export prices of ABS in the USA were impacted by the rise in freight costs amidst the low level of the Mississippi River. Likewise, the upstream crude oil prices rise this week also prompted the ABS market bullishness across the globe. The reason for crude oil price gains has come out as the producers' expectations of supply tightness in September 2023. The Brent Crude November futures were up 3%, while US West Texas Intermediate Crude (WTI) October futures rose 9% this week.
In addition, the ABS prices in China have recently gained a hike, along with a surge in the upstream materials, including Styrene, Butadiene in the first week of September 2023. The supply side supported the ABS spot market as the price of Butadiene, crude oil, and Styrene rose. As per the latest insights, in August, the market price of Styrene fell first and then rose at the termination of August 2023 due to the plant shutdown at Lianyungang Petrochemical, Dongming Petrochemical, and Shandong Lihuayi, resulting in a low level of inventory and a rising market.
As per the ChemAnalyst, the prices of ABS are projected to gain an optimistic movement in September 2023 with a rise in the upstream materials and lowered production run rates. From the demand perspective, the ABS downstream industries, such as automotive, may contribute as one of the cost-