European PS and ABS Prices Continue to Fall as Weak Demand Dominates

The European Polystyrene (PS) and ABS markets remained under pressure in July, with prices extending their downward trend as weak demand, comfortable supply, and the approaching summer holiday season continued to weigh on sentiment. Despite another round of significant price reductions, buyers largely restricted purchases to immediate production needs, indicating that market fundamentals have once again become the key driver of pricing.

PS Gives Up a Large Share of Earlier Gains

Local GPPS and HIPS prices in Italy and Northwest Europe have declined by approximately €575/ton, or around 25%, from the highs recorded in late March.

The recent correction has reversed a substantial portion of the sharp rally seen between late February and late March, when concerns over feedstock availability pushed prices higher by nearly €875/ton, equivalent to an increase of around 60-65%.

Even after the latest decline, PS prices remain roughly €300/ton above pre-conflict levels, indicating that part of the earlier geopolitical premium is still reflected in the market.

ABS Also Records Sharp Correction

The ABS market has followed a similar pattern. Natural injection and extrusion grades in Italy and Northwest Europe have fallen by approximately €690-695/ton, representing a decline of around 21% from the peak levels reached in early May.

However, the correction has only partially offset the earlier rally, during which ABS prices increased by approximately €850-890/ton, or around 43-49%, between late February and early May.

Current ABS prices continue to trade about €160-200/ton above pre-conflict levels, showing that a portion of the geopolitical price premium remains in place.

Demand Continues to Drive the Market

Market participants identified weak demand as the primary reason behind the ongoing price correction. Most converters continued purchasing only limited volumes to meet immediate production requirements while working through inventories accumulated during the strong buying activity earlier this year.

Demand from major downstream industries, including construction, household appliances, durable goods, and consumer products, has remained subdued. At the same time, expectations of additional price declines have encouraged buyers to delay inventory replenishment.

Although inquiries have improved slightly compared with May and June, actual trading activity remains limited as most processors continue waiting for lower prices. Many converters also plan to extend production shutdowns during August, which is expected to further reduce buying activity throughout the summer.

Suppliers Continue Offering Larger Discounts

While some producers initially attempted to limit July price reductions to protect margins, competitive pressure increased rapidly as the month progressed.

Several distributors passed on the full decline in styrene costs and, in some cases, offered even larger discounts to align prices with current market conditions. Some reported reductions approaching €390-400/ton compared with June offers, while producers also became more willing to negotiate additional discounts for larger spot purchases as inventories increased and order books remained weak.

Market Fundamentals Outweigh Feedstock Costs

Although the €270/ton decline in the July styrene settlement contributed to lower polymer prices, market participants agreed that weak supply-demand fundamentals are now having a much greater influence than feedstock movements.

Recent increases in crude oil and spot styrene prices have done little to improve sentiment, as buyers remain focused on comfortable supply levels and sluggish demand. Unless geopolitical tensions lead to prolonged disruptions in energy exports, most participants believe temporary increases in oil prices alone will not be enough to reverse the current downward trend.

Outlook

Market participants expect the pace of price declines to gradually slow as PS and ABS values move closer to pre-conflict levels. However, comfortable supply, weak downstream demand, and the seasonal slowdown during the summer holiday period are expected to keep buyers in a strong negotiating position in the coming weeks.

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