Europe styrene contango bucks expectations

10 September 2008 15:55  [Source: ICIS news]

LONDON (ICIS news)--Spot styrene in Europe has flipped into contango on muted front-month business despite potential feedstock cost drops ahead, players said on Wednesday.

A deal was confirmed at $1,550/tonne (€1,101/tonne) FOB (free on board) Rotterdam with October loading, while September material was talked in a bid/offer range of $1,530-1,550/tonne FOB Rotterdam with business rumoured close to the low end of this range.

October was talked within a $1,540-1,560/tonne FOB Rotterdam range, at a $10/tonne premium to the front month.

“As far as I can tell, September is basically over,” said an source at a major consumer. “There is no interest in buying at all, so all you can really do as a seller is to look forward to October.”

The $10/tonne contango came despite a general expectation that key feedstock ethylene contracts would see significant decreases in the fourth quarter of the year.

Where third-quarter contracts had been settled at €1,228/tonne FD (free delivered) NWE (northwest Europe), spot values were now in the low €1,000s/tonne FD NWE with further price erosion widely mooted.

Said a trader: “Nobody wants to buy September any more, and there is more product coming in. In terms of physical molecules, tanks are getting full.”

Another trader made the case for higher October values on the basis of tighter supply and energy costs.

“Three styrene plants are out in US, there will be an EU outage in October and crude in October will reflect November-to-December heating markets. It also costs $15/tonne plus [for storage] in September,” he said.

In the wake of Hurricane Gustav, styrene plants heard shut down in Louisiana included Americas Styrenics’ combined 950,000 tonne/year St. James plants, Westlake’s 220,000 tonne/year Lake Charles plant and Total’s combined 1.16m tonnes/year plants in Carville.

In addition, LyondellBasell’s Channelview plant in Texas and INEOS NOVA’s Sarnia plant in Canada were both said to be down for a turnaround in September and October.

Styrene prices in the US were widely seen as being well above their European counterparts, but any traders’ ambitions to export material were thwarted by a lack of available shipping, market participants said earlier in the week.

A major European styrene producer, meanwhile, was thought to be planning a major turnaround at one of its key regional sites in October and November, although this could not be confirmed at source.

Players earlier said that current energy complex volatility and length of supply were making benzene and styrene trading increasingly difficult.

($1 = €0.71)

For more on benzene, ethylene and styrene visit ICIS chemical intelligence
To discuss issues facing the chemical industry, visit ICIS connect

By: Peter Salisbury
+44 20 8652 3214

< previous article(VIDEO - ICIS news Europe Lunchtime Bulletin 3 November 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly