Global SAN Prices Surged as Feedstock Market witnessed Sharp Uptick during Feb 2024

Throughout February 2024, the price of Styrene Acrylonitrile (SAN) has consistently trended upwards. This increase can be attributed to significant cost pressures stemming from the high prices of its feedstock, styrene monomer, in the European market. Despite this price rise, demand from downstream sectors such as construction, consumer goods, and automotive industries has been lower. The cost increase is due to a combination of factors, including higher freight rates, extended lead times, and a significant rise in the price of styrene monomer, which is the primary raw material for SAN, which has climbed by approximately 20% in February 2024 as per ChemAnalyst data. Geopolitical tensions in the Middle East and Eastern Europe have influenced oil prices, which in turn impact ethylene prices, a key feedstock for styrene production. These tensions have contributed to peak prices for styrene during this period, reflecting the broader market volatility and uncertainty driven by geopolitical events.

The decline in demand is extensive, impacting industries such as construction, consumer goods, and even traditionally strong markets like cosmetics. This widespread decrease highlights the difficulties confronting the SAN market. SAN has experienced a lacklustre performance in the market, characterized by record-low demand, positioning it as one of the least performing polymers in the region.

Similarly, the pricing trend in the US SAN market was also influenced by the styrene market during this period. In February, US companies reported continued activity expansion, although at a slower rate. Output increased slightly, with the services sector experiencing a modest uptick, while manufacturing saw a renewed increase in production. This improvement in manufacturing was supported by better supply chain conditions following disruptions from adverse weather in January. Improved weather conditions in February were more impactful than shipping concerns, leading to an overall enhancement in supplier delivery times. This improvement facilitated increased factory production. Additionally, the reduction in the prevalence of inventory reduction policies further boosted production and maintained high levels of business confidence among manufacturers regarding the outlook for the year ahead.

The cost of SAN in the European market is expected to be on the higher side due to high-cost pressure from feedstock, despite low demand from downstream industries. Additionally, the conflicts in the Red Sea have disrupted inputs from the Asian market to Europe, leading to increased freight rates. These factors are affecting the final prices of derivative products, including SAN. The optimistic outlook in the US market has prompted firms to increase stocks of SAN purchases and finished goods, both of which returned to growth in February. This trend is expected to continue in the coming months, potentially leading to increased demand for SAN in the American market.