US ABS Prices Rise amidst Supply Constraints Despite Unaltered Demand

The US ABS (Acrylonitrile Butadiene Styrene) market experienced an upward price trend in the first half of February 2024, amidst unaltered downstream demand and limited production activities. Elevated feedstock Styrene and Butadiene prices added the input cost pressure on ABS producers during this timeframe. Simultaneously, a significant drop in temperatures had a notable impact on the US Gulf Coast petrochemical industry hampering production rates. As a precautionary measure amid icy road conditions, Port Houston's terminals were temporarily closed.

The demand for ABS in the United States primarily exhibited a stagnant pattern. Further, the modest uptick in international inquiries played a substantial role in influencing the recent price dynamics. By the concluding second week of February 2024, downstream manufacturers and traders in the region adopted a cautious approach, building up their inventories in anticipation of a potential market shift driven by the anticipated increase in demand from the downstream sector.

As per the latest release, Trinseo, a leading ABS production company, is expecting another quarterly net loss in the first quarter of 2024, following the announcement of a similar loss in its fourth quarter of 2023 results. The company has been grappling with unprecedented drops in downstream demand since the third quarter of 2022, compounded by lingering macroeconomic uncertainty.

Compounding challenges in the shipping industry, the United Nations trade body issued a warning regarding escalating assaults on ships in the Red Sea. This heightened maritime insecurity, coupled with existing geopolitical tensions affecting Black Sea shipping and climate change impacts on the Panama Canal, has created a "complex crisis" affecting crucial trade routes. Consequently, the ABS market grappled with disrupted operations and increased cost pressures amidst no significant improvement from the demand side. In response to this, producers chose to temporarily reduce production rates for the time being. Currently, US shipments are on hold due to elevated Houston prices and the additional complication of Houthi rebel attacks on container vessels in the Red Sea. The future trajectory of the ABS market remains uncertain in the short term, as it navigates between rising costs and subdued downstream inquiries.

As per the ChemAnalyst, the ABS prices are expected to show a relatively increasing trend in the coming weeks due to a shortage of the material and high input cost pressure in the line of high feedstock Styrene and butadiene prices. However, downstream demand fundamentals in the automotive and home appliance industry haven’t shown any signs of resilience to impact the ABS prices further in the American region.