European sellers down revise ABS price hikes in Italy

25-May-11

The month of May started with a bang for the ABS market as Ineos ABS declared it would seek a price hike of €150/ton and Styron said it would seek an increase of €110/ton above April prices, as per CHemorbis. ABS producers were pushed to seek higher prices because of escalating costs as all three feedstocks - ACN, butadiene and styrene were on an increasing trend at the beginning of the month, and short supply of butadiene. ABS producers had been unable to gain any increases in April because of unsupportive styrene contracts. Producers reported settling April gentlemen’s agreements in Italy with rollovers. At the start of May, butadiene contracts rose by €360/ton over April. Upswing in styrene contracts were not as dramatic- an increase of €33/ton on average was seen, while ACN prices surged- spot ACN moved up US$50/ton in the first week of the month triggered by a force majeure declared by Ineos and supported by the €35/ton rise on propylene contracts for the month. Following the price hike announcements, producers came to the Italian market with price increases of €100-150/ton on their ABS offers. However, the market lost some of its steam this week with sellers agreeing to prices below initial targets. An official distributor of a West European producer reported late last week that demand has been very poor for the last 2-3 weeks, with only the butadiene shortage as well as higher costs holding up the market. He had to revise his initial offers, which had seen increases of over €100/ton to sell some small quantities. He concluded deals for spot transactions with increases of €60-80/ton over April. He feels that slightly lower prices could be seen in June because of the poor state of demand. A converter confirmed receiving an offer for West European ABS with an increase of €80/ton, that he rejected because he found it too high. Instead he managed to purchase a spot cargo of ABS from a South European producer that was €100/ton below the West European offer. He concluded the deal for the South European material with an increase of €50/ton over April. The buyer said he believes ABS prices have reached their peak level now.