Fears styrene could soar on Dow production cap

25 June 2008 16:42  [Source: ICIS news]

LONDON (ICIS news)--News of styrene producer Dow’s decision to limit its production by up to 40% on high costs has caused jitters in the European market, players said on Wednesday.

 

The company declined to comment on both the start date and the duration of its production cap, as buyers and sellers alike agreed that the flurry of speculation could lead to firmer prices.

 

"With the market balanced at the moment, this move can only tighten it," one observer said, adding that while imports were likely to feature, any plant shutdown was bound to have an effect on the dynamics.

 

Buyers expressed concern that producers would look to jump on the bandwagon in a bid to achieve impressive sales.

 

"If it is a matter of days, it should be okay but if we are talking weeks, then it will have a big impact and prices will most certainly rise," one player noted.

 

Furthermore, the recent steady increase in both crude and ethylene would help sellers to target firmer prices.

 

This was evident throughout the day, with an early July deal reported at $1,650/tonne (€1,056/tonne) FOB (free on board) Rotterdam, followed by a deal $25/tonne steeper at $1,675/tonne FOB Rotterdam.

 

However, it was generally agreed that developments would need to be closely monitored in order to gauge a better idea on where the market would head.

 

($1 = €0.64)

 

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By: Fiona Bond
+44 20 8652 3214

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