Producers limit drop in Q4 styrene contract

22 October 2001 00:00  [Source: ICB]

European styrene quarter four contracts have settled at E545/tonne FD, down E20/tonne FD on quarter three. The new range is now E545-570/tonne FD, with the top end of the spread representing truck business.

The settlement swiftly followed the benzene quarter four contract, which dropped E23/tonne down and settled to E270/ tonne FD, with the quarter four ethylene contract agreed at E553/tonne, E55/tonne down on the previous quarter.

Against this backdrop, styrene players quickly found consensus around the new contract number.

'The styrene settlement for quarter four reflects a fundamentally weak market. We do not see any real changes in the supply and demand balance during quarter four', CMAI's John Bonarius comments.

Bonarius also suggests that any improvement in the polystyrene (PS) market is unlikely to take place during the fourth quarter and that this is valid for Europe as well as Asia and North America. Meanwhile, there are reports of further PS production cuts being implemented by European producers.

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Producers said the 'limited' E20/tonne decrease on the quarter three number was achieved thanks to the actions directed at reducing styrene supplies during quarter three and the relative stability of spot values.

'We are no longer facing the long market we carried during quarter one and two, so we have been able to limit the decrease to E20/tonne against the E135/ tonne slump in quarter three', one major producer said. He also added: 'We cannot take any more price cuts as there was already no margin left in quarter three'.

Looking further out into quarter four, players say that although October appears to be showing some signs of improved contractual demand from PS, things are expected to deteriorate during November and December.

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