FocusEurope PS producers fear more bad news

03 September 2008 16:38  [Source: ICIS news]

LONDON (ICIS news)--Polystyrene (PS) producers’ margins are expected to be squeezed further in September as prices are softening alongside the drop in monthly styrene contracts, sources said on Wednesday.

 

September barge styrene contracts settled within a range of €1,230-1,250/tonne ($1,782-1,812/tonne) FD (free delivered) NWE (northwest Europe), from their August range of €1,260-1,286/tonne FD NWE.

 

The new styrene settlements were higher than some PS producers had expected, and lower PS prices had already been settled, in spite of earlier aspirations to keep hold of some of the monthly styrene drop.

 

Not all producers felt the new styrene contract was too low, as spot prices had been high, energy costs had soared, and a change in exchange rates affected values.

 

The upshot for the PS market is that September PS prices are under downward pressure at a time when PS producers’ margins are already weak.

 

Last week, several large PS buyers had been expecting to share the reduction in the styrene drop with producers, when many had expected styrene contracts to decrease by €70-80/tonne.

 

“We had expected a drop of about €30/tonne in September but we will take whatever we can get,” said a PS buyer.

 

Indications were that PS prices for September were down by €35/tonne in many cases, with some talk of reductions as high as €50/tonne.

 

Large PS accounts were expected to be settled later in the month.

 

An element of spot styrene was reported to be taken into account when styrene costs were calculated. Currently bid/offer indications for European styrene were talked within a $1,580-1,610/tonne FOB Rotterdam range for September.

 

Several PS producers said they would be seeking a rollover for September PS, although they admitted that this might now be difficult to achieve.

 

September volumes were good, as many PS buyers had been holding off as they expected a lower styrene settlement in September, but this played havoc with August off-take.

 

One PS producer described August PS demand as “disastrous”, and another commented that it would be difficult to make up for the poor demand in August.

 

PS demand was estimated to be running at 5-6% below 2007. Production was cut back accordingly.

 

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

 

($1 = €0.69)

 

For more on PS visit ICIS chemical intelligence

To discuss issues facing the chemicals industry visit ICIS connect

 

 

By: Linda Naylor
+44 20 8652 3214

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