Europe PS reduced on poor demand, weaker SM

12 August 2008 17:54  [Source: ICIS news]

LONDON (ICIS news)--European polystyrene (PS) producers are running operations at minimum rates in some cases as demand wanes in expectation of lower styrene contracts in September, market sources said on Tuesday.

“Demand is pretty lousy,” said one producer. Another estimated rates to be running at below 70%.

PS demand has been weak during 2008, and production has been cut back for several months to accommodate poor volumes.

PS prices have been tracking those of styrene for many months, and no exception was expected in September.

Spot styrene was now bid below $1,600/tonne (€1,072/tonne) FOB (free on board) Rotterdam, although business at this level was not confirmed. The bid-offer range was reported at $1,640-1,680/tonne.

These new spot styrene ideas were well below the August barge contract range of €1,260-1,286/tonne FOB Rotterdam, and PS buyers were well aware of this.

“We have no reason to rush to settle things early,” said one major PS buyer, who had still to settle August PS prices.

PS producers had hoped to recover some margin in their PS business, as well as to cover the increase in August styrene monomer contracts which some producers estimated at €65/tonne.

Prices were up by a minimum of €50/tonne in August, short of initial targets, one of which was a high €130/tonne. Others were more modest.

General purpose PS (GPPS) prices were reported in the mid €1,300s/tonne FD (free delivered) NWE (northwest Europe), for medium-sized buyers, with benefited from only limited discounts.

Some export business was heard offered into Turkey from Europe at similar levels of €1,350/tonne CFR (cost and freight) Turkey but it was not clear whether this had attracted any buyers, as expectations of lower styrene affected demand in most markets.

PS producers in Europe include BASF, Total Petrochemicals, Dow Chemical, Polimeri Europa and INEOS NOVA.

($1 = €0.67)

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By: Linda Naylor
+44 20 8652 3214

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