Europe’s ABS Correction Gathers Pace, Steeper July Falls Loom

Europe’s ABS market weakened significantly during June as sellers increasingly lowered prices in response to poor demand and falling raw material costs. Attempts by producers to maintain stable pricing at the beginning of the month quickly lost momentum, with transactions eventually concluded at notable discounts as market conditions continued to deteriorate.

Demand remained sluggish throughout June, with many converters relying on existing inventories accumulated earlier in the year. Weak order activity from key downstream sectors further reduced purchasing requirements, encouraging buyers to limit purchases to immediate needs. Expectations of additional price declines also kept many participants away from the market, resulting in low trading activity.

Competitive import offers from Asia added further pressure on European suppliers. Material from Asian origins, particularly China, continued to arrive at attractive levels, increasing competition in the market. Although these offers were more competitive than domestic material in many cases, buyers remained cautious about committing to long-lead-time cargoes due to comfortable stock levels and expectations of lower local prices ahead.

The bearish sentiment was reinforced by developments in upstream markets. Butadiene contract prices moved lower for July, while spot styrene values recorded a sharp decline during June, falling back to levels below those seen before the Middle East conflict. The steep drop in feedstock costs has significantly reduced production costs and strengthened expectations for further ABS price corrections.

Looking ahead, market participants largely expect another round of substantial reductions in July. Lower feedstock values, weak demand, sufficient supply, and ongoing competition from imports are all expected to weigh on pricing. The upcoming summer holiday season is likely to add further pressure, as many processors prepare for maintenance shutdowns and reduced operating rates during July and August.

Despite the recent correction, ABS prices remain noticeably above levels seen before the geopolitical rally earlier this year. A considerable portion of the earlier gains is still embedded in the market, leading many players to believe that the current downward cycle has not yet fully run its course.

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