US and European ABS Market grapples with Rising Prices amid Production Delays

Texas (USA): In February 2024, the European and US ABS (Acrylonitrile Butadiene Styrene) market demonstrated a relative increase for the second consecutive week, due to the unchanged downstream trading environment and high production cost pressure. The surging feedstock Styrene and Butadiene prices exerted high input pressure on the current ABS market at the termination of the month and as a ripple effect, producers reduced production rates for the time being in the European region.

The European ABS market, with the modest demand conditions and shortage of suppliers, is seeking price increases, further resulting in prices stabilizing at an upward side in the week ending March 1, 2024. ABS producers aim to avoid further margin erosion, and the prices have experienced a continuous upward trend in the previous weeks of February along with consistent escalations in the feedstock Styrene and Butadiene prices. The upstream oil markets continue to prioritize supply security in light of increased geopolitical tensions.

Russia is grappling with infrastructure attacks and has initiated a ban on exporting gasoline. The Houthi strike on the bulk carrier Rubymar in the Red Sea has sparked worries about potential repercussions on worldwide tanker traffic. Presently, sellers report balanced ABS stocks with slow demand, particularly in the home appliance and automotive industries for this timeframe.

Likewise, during the latter part of February 2024, there was a consistent upward trajectory in US ABS prices, influenced by heightened production costs and a slowdown in regional supplies. Delays in US ABS shipments are attributed to increased FAS Houston prices, the repercussions of the Red Sea attack, and buyer reluctance amidst ongoing investigations.

Sellers are holding off on offering US material until they receive guidance from Europe, anticipating higher costs despite lower production expenses in the US. Meanwhile, disruptions in Asian supplies result in shipment backlogs and extended transit times. Offers from Taiwan are scarce, and volumes in transit face delays. Local sellers, benefiting from reduced import availability, strengthen their position in the market.

Despite the challenging global market conditions, regional suppliers contemplate margin recovery when downstream market fundamentals improve, and planning potential ABS price hikes in March. As per ChemAnalyst, the fluctuations expected in the ABS prices are influenced by stock availability and demand-driven requirements in both the Eurozone and the USA.

The European ABS market is poised to address challenges with adaptability as regional industry participants evaluate the effects of global events on pricing, supply chains, and potential shifts in the ABS market in the upcoming months. Anticipated increases in import costs, coupled with disrupted supply chains and strengthening in other major global markets, prompt discussions on the potential reshaping of ABS supply-demand dynamics in the coming month.