Styrene still challenged after NOVA deal - Citi

05 October 2007 21:15  [Source: ICIS news]

HOUSTON (ICIS news)--Margins remain pinched in the styrene industry due to high feedstock benzene prices and the threat of oversupply, according to Citigroup analyst PJ Juvekar on Friday.

“We believe that the industry is not out of the woods yet,” he wrote in a research note.

NOVA Chemical’s plan to purchase and shut down Sterling’s styrene production is positive for the industry since it will remove 5-6% of North American capacity, but high benzene prices, product substitution and upcoming capacity additions remain serious challenges for the industry, according to Juvekar.

Styrene producer Dow Chemical may not see the same benefits as NOVA from the shutdown of Sterling's capacity, according to the note.

“Dow doesn’t seem as upbeat about the styrene chain, probably because it has a more global approach,” Juvekar wrote.

By: John Waggoner
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