Asian PS, ABS Markets Face Further Downside Risk in July

PS and ABS markets across China and Southeast Asia remained under heavy pressure through late June, with prices extending their decline as weak demand, abundant supply, and lower feedstock costs continued to weigh on sentiment. Market participants increasingly expect the downtrend to continue into July as key fundamentals remain unfavorable.

The latest round of price reductions followed a sharp fall in crude oil and upstream raw material markets after geopolitical tensions in the Middle East eased. Styrene prices have retreated to levels seen before the conflict-related rally, while butadiene has also moved below earlier benchmarks. Despite aggressive seller discounts, buying activity has remained sluggish as most converters continue to purchase only for immediate requirements.

Although prices have corrected significantly since April, imported PS and ABS grades still trade above levels seen before the Middle East conflict. ABS continues to hold the largest premium, while GPPS and HIPS grades also remain elevated compared to pre-conflict levels. This suggests that part of the earlier geopolitical premium is still embedded in the market and could unwind further if current conditions persist.

A notable exception has emerged in China’s domestic ABS market. Local ABS prices have fallen below pre-conflict levels due to intense competition among producers, rising inventories, and weak demand from the electronics and home appliance sectors. The sharp decline has widened the gap between domestic and imported material, making locally produced ABS considerably more competitive.

Domestic PS prices in China have also weakened but remain above their pre-conflict levels. Market players believe this leaves room for further corrections if feedstock costs continue to fall and demand fails to improve.

Several bearish factors are expected to keep pressure on PS and ABS markets during July. Feedstock support has weakened considerably as crude oil, styrene, and butadiene prices have all retreated following the normalization of supply concerns. Lower production costs are encouraging buyers to delay purchases in anticipation of further reductions.

Demand conditions remain poor across both China and Southeast Asia. Consumption from key end-use sectors such as consumer goods, electronics, and household appliances has been subdued, while cautious buying strategies continue to limit trading activity. Many buyers are postponing replenishment purchases, expecting prices to move lower in the coming weeks.

Supply conditions also remain comfortable. In China, ongoing capacity additions and relatively high operating rates have offset production losses from maintenance shutdowns, keeping inventories elevated. Excess material availability has intensified competition among domestic suppliers and increased pressure on regional markets.

Across Southeast Asia, inventories remain sufficient and buyers show little urgency to rebuild stocks. Competitive Chinese material continues to enter the region, further reducing sellers' pricing power and adding to downward pressure.

With feedstock costs falling, demand remaining weak, and supply continuing to exceed buying requirements, market participants broadly expect PS and ABS prices across Asia to remain under pressure through July.

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