Europe’s ABS Market Faces Cost Pressure as August Outlook Turns Uncertain

Europe’s ABS market is beginning to show signs of stabilization after months of sharp price declines. While weak demand and comfortable inventories continued to weigh on trading throughout July, the recent rebound in crude oil along with stronger styrene and benzene prices has altered expectations for August.

Although many market participants had expected another round of price reductions next month, rising feedstock costs driven by renewed geopolitical tensions and tighter upstream supply have prompted suppliers to reconsider their pricing strategies. As a result, market discussions have shifted from expecting further steep declines to debating whether prices are approaching a floor. However, sluggish demand continues to cloud the outlook.

July discounts deepen to stimulate sales

Throughout July, most ABS suppliers continued offering significant price reductions to encourage buying activity. Transaction prices fell by as much as €300/ton, with some deals seeing even larger cuts. In many cases, these reductions exceeded the actual decline in raw material costs as sellers focused on clearing inventories and boosting sales.

Despite the aggressive discounts, buying activity remained limited. Although inquiries increased slightly, most converters continued purchasing only for immediate production needs. Imported ABS also remained competitively priced, though several Asian suppliers have recently begun indicating firmer offers for August due to higher feedstock costs and rising freight rates.

Demand remains weak despite lower prices

Lower prices have not been enough to revive demand. Many converters continue to rely on inventories built during the spring buying period, reducing the need for fresh purchases.

Weak downstream consumption, limited order visibility, and the ongoing summer holiday season across parts of Europe have kept buyers cautious. Most participants remain unconvinced that suppliers will be able to implement meaningful price increases in August, arguing that soft demand will continue to limit pricing power despite higher production costs.

Higher feedstock costs reshape August expectations

The market outlook for August has become more balanced than it appeared only a few weeks ago. Brent crude oil has surged above $98/bbl, while benzene and styrene prices have strengthened significantly following renewed geopolitical tensions and tighter feedstock availability. Spot styrene prices are now around $320/ton higher than late June levels.

Additional support has come from lower styrene operating rates in Europe, limited import availability, the planned long-term shutdown of LyondellBasell’s PO11 styrene unit in Rotterdam, and force majeure at the company's Wesseling butadiene plant due to low Rhine water levels. These developments have increased uncertainty across the regional feedstock chain and added further pressure to production costs.

Even so, most market participants believe market fundamentals will remain the deciding factor. Comfortable inventories, subdued downstream demand, and the seasonal summer slowdown are expected to limit purchasing activity, making it difficult for suppliers to fully pass higher costs on to buyers.

For now, the most likely scenario for August appears to be price stabilization or only modest adjustments, rather than another steep decline or a strong recovery.

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