Europe’s PET, PS and ABS markets brace for further hikes in Sept

Regional players have been gradually returning from long summer holidays in Europe, with some sources reporting better than expected activity in the market during August. This was mainly attributed to the cautious pre-buying ahead of firmer voices for September.

Rising costs have been the major pressure point, which propelled spot PET and styrenics markets higher in August. Spot PET and ABS markets reversed direction after a prolonged downtrend, while PS prices snapped a 2-month long downtrend as August kicked off. The markets are expected to extend gains into September. Players still discuss to what extent increases can be absorbed as the market driving forces will primarily revolve around cost factors and macroeconomic influence on demand.

PET rises after a year-long downtrend

Regional markets changed direction after following a mostly downtrend for the past one year. Indeed, spot prices posted a cumulative decrease of around 45% since July 2022 to hit 2-and-a-half-year low and bottomed out in late July.

Price hikes were driven by limited import availability and higher feedstock settlements, with respective hikes of €30/ton and €20/ton in July and August PX contracts. Producers applied hikes to avoid selling at a loss. Meanwhile, keeping run rates low has also borne fruit. Yet, PET bottle deals were closed with limited hikes of around €30/ton as demand wound down further during summer holidays.

Firmer voices for September were triggered by a strong upstream chain rather than robust buying enthusiasm. Converters bought conservatively before leaving for holidays, justifying low stock levels on the buyers’ side. If regional producers run maintenance shutdowns traditionally in Q4, this would lessen availability further considering limited imports from China. As a counter argument, the high bottle season nears to an end, which will probably put a cap on hikes.

Styrene hikes bring back bulls into the PS, ABS markets

PS prices snapped a 2-month long losing streak amid higher styrene contracts and rebounded from 2-and-a-half-year low early this month, defying unsupportive market fundamentals. There were no supply concerns in downstream PS markets, while lethargic demand reflected the summer lull and poor macroeconomic conditions.

Styrene supplies shrank visibly due to several production hiccups across the region, sending spot values soaring. FOB NWE styrene prices hit a year-high at around $1650/ton earlier in the week before seeing slight corrections recently.

September contracts are also expected to see increases of up to 3-digits given higher spot values and feedstock prices. Producers will reflect the cost pass-through from styrene. Price hikes and restocking needs may lure buyers back to the market next month.

ABS market shows mild rebound from multi-year lows

When it comes to ABS, prices were on a relentless downtrend since April 2022 to hit their lowest level since December 2020. This was attributed to the sharp contraction in derivative sectors. ABS is used for appliances, toys, consumer electronics as well as in the automotive and construction sectors.

However, the weekly average data for ABS showed that prices bottomed out this month after small hikes passed on some deals, supported by firmer styrene settlement. Rollovers also ensued. Although the market remains pressured by ample supplies, anemic demand and lower import offers, firmer costs will prompt suppliers to hike their offers in the first place in September. September butadiene contracts indicated €35/ton increases from last month, while eyes are now locked on the next styrene settlement.