07 July 2003 00:00 [Source: ICB]NWE European styrene buyers and sellers are seriously engaged in the negotiation of quarter three (Q3) contracts now that both the benzene and ethylene quarterly settlements have been achieved.
A significant decrease in the styrene contract price is being anticipated by the market, as buyers and sellers admit that a correction on quarter two (Q2) is necessary.
Both key feedstocks prices plunged in Q3, with benzene settling at E316/tonne FD and ethylene at E445/tonne FD, a decrease of E209/tonne and E130/tonne respectively on Q2 contract prices.
In addition, the styrene spot market halved in value just after the Q2 contract settlement of E775-800/tonne FD was achieved. Since then, spot numbers have recovered somewhat and are now hovering around $600-640/tonne cif NWE. Even a couple of production outages did not have a significant impact on spot prices in Europe last week.
Weaker spot prices were compounded by the poor performance of the polystyrene market during Q2, which continued to post serious losses in June (see page 14). Polystyrene production cutbacks are also still in place, which has further eroded the demand for styrene monomer.
Players said the styrene markets are still looking for clearer direction for Q3 as they attempt to assess future west European demand and Asian purchasing intentions, for the remainder of the year.
According to a market observer: 'Even a significant fall in contract prices in euro terms is likely to leave dollar priced material destined for other regional markets relatively high.' This is due to the strengthening of the euro against the dollar in recent months.
Europe is also likely to remain attractive to importers.
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