27 August 2008 15:57 [Source: ICIS news]
LONDON (ICIS news)--Styrene buyers and sellers alike expressed dismay on Wednesday as they saw benzene spot values rising before both markets moved towards contract negotiations for September.
“Styrene doesn’t need these kinds of ups and downs,” said a source at a major styrene producer. “It is a lousy situation, and we will try to defend our margins as best as possible. Styrene cannot take more huge margin losses.”
Spot benzene values had moved up on renewed buyer interest and reinvigorated crude oil values over the past week, changing market participants’ ideas on contract settlements from €100/tonne ($147/tonne) decreases to €20-30/tonne decreases.
Publicly settled styrene contracts have traditionally moved in line with benzene and buyers and sellers alike were concerned at the sudden upturn.
Styrene producers were bullish on their inability to give up any more margin, while buyers said that they were still hoping to see decreases of around €50/tonne in their September settlements.
“Styrene will not give up any margin,” said the styrene producer source. “What happens on benzene, we should be able to pass the same through on styrene. A €20-30/tonne decrease on benzene means the same on styrene should be okay.”
“On the basis of styrene and benzene last week, by my calculations we are down €50/tonne,” countered a styrene buyer, however. “I have spoken to a lot of people in the market, and that is where most people see things.”
Both producers and buyers agreed that they saw no reason for the upturn on benzene other than increased buying interest and a marginal increase in the crude oil price. With downstream demand weak, unrelentingly high prices would do little to help the market.
“We are seeing a downturn on business and there are problems,” said a source at an expandable polystyrene (EPS) producer. “There’s no reason for benzene to be valued like this - there’s plenty of supply out there.”
“Last week we were expecting September styrene to be down by €80-100/tonne, now it could be as little as €30/tonne down," said a major PS producer. “We will run our [PS] plants down further.”
Publicly settled August barge styrene contracts were finalised within a €1,260-1,286/tonne FD (free delivered) NWE (northwest ?xml:namespace>
($1 = €0.68)
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