FocusEurope spot styrene diversifies on origin

28 February 2008 16:49  [Source: ICIS news]

By Peter Salisbury

LONDON (ICIS news)--The presence of styrene producers as buyers has created a premium in the value of EU-origin monomer over non-EU material, as many will only buy from the EU, market participants said on Thursdays.

"If you have EU material then you can sell to anyone. If you have non-EU material, then you are limited in who you sell to. That means that EU material is at a premium of about $10/tonne over non-EU,” said one trader.

“There are one or two industry buyers, who are normally producers, who can only buy material from the EU. At the moment, one of them is quite active, and the other has been and is expected to be in the future."

Two deals had been seen in the previous day's trading at $1,493/tonne FOB (free on board) Rotterdam and $1,520/tonne FOB Rotterdam, both for March loading.

The former had been done earlier in the day when indicational values had been at $1,500-1,510/tonne FOB Rotterdam, and the latter when indications had dipped to $1,495-1,505/tonne FOB Rotterdam.

The main difference in the $27/tonne spread, players said, however, had been origin.

When questioned further, market participants were loath to disclose what the difference was between “any region” material, “T1”  - American import material which was reportedly prevalent in the region, and EU-origin material.

“It could be that there is a difference in quality which some producers are afraid to risk,” said another trade source, adding however that this was unlikely.

There had been issues with high ethylbenzene content material, players said, as this could not be used in food applications for downstream polystyrene.

Other players were quick to discount the notion entirely.

“There is no difference in quality whatsoever,” said another trader. “If I buy imported material and put it in a tank in Rotterdam, or buy it from a producer a few miles away, there is genuinely no difference.”

Import tariffs, meanwhile, were not an issue either.

“T1 styrene imported from the US doesn’t require you to pay duty in Europe,” a producer source said. “So apart from shipping costs, it won’t cost you any extra.”

“Once you’ve bought it, shipped it and customs cleared it, it is the same thing,” said a source at a European styrene distributor.

The source said that the issue could be to do with later taxation on downstream products, especially if the intention was to ship this back out of the region.

“Origin can have some influence on the origin of the final product produced,” said another trader.

“Some companies do not want to have any problem or doubt with the authorities when they declare origin of their product which they intend to export.”  

($1 = €0.66)

For more on styrene visit ICIS chemical intelligence

By: Peter Salisbury
+44 20 8652 3214

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