Europe styrene jumps $65-70/t as US arb eyed

22 September 2008 16:12  [Source: ICIS news]

LONDON (ICIS news)--Spot styrene prices shot up $65-70/tonne (€45-48/tonne) in Europe on Monday, with traders citing arbitrage opportunities to the US and upstream values as key drivers.

“Prices have increased more than $60/tonne in one day - crazy!” said a trader source.

By 14:15 GMT bid/offer valuations were being talked at $1,535-1,550/tonne FOB (free on board) Rotterdam, with an October deal reported at $1,530/tonne FOB Rotterdam, according to global chemical market intelligence service ICIS pricing.

Indications for October loading material had opened at $1,470-1,480/tonne FOB Rotterdam. The $1,535-1,550/tonne range also marked an increase of $75-80/tonne from the close on 19 September.

Explanations for the jump in values were varied, with traders accrediting crude oil, benzene and a tight and highly-priced US market as defining factors.

Said one trader: “It’s because of buying interest and increasing benzene and crude.”

Benzene values had also risen, with the October market valued at $1,145-1,160/tonne CIF (cost, insurance and freight) ARA (Amsterdam, Rotterdam, Antwerp), up $15-20/tonne from last week's close.

Crude oil values had also surged, with WTI valued at $109/bbl, up $4/bbl from Friday’s close.

Other traders meanwhile, touted arbitrage opportunities into the US as a driver, with the Western spot market valued at $0.76-0.80/gal FOB USG (US Gulf), equivalent to $1,675.51-1,763.70/tonne FOB USG according to ICIS pricing.

Added another trader: “It is because the US is short, and South America and the US need to buy."

“Europe is nearest and easy logistically. Asia is too far away and difficult on shipping although cheaper, hence European molecules are being worked into the Americas.”

Another trader however, said that he did not see the fundamentals as lending such an upside to the market.

“At time trade sentiment pollutes the real picture,” he said. “There is a lot of noise in this kind of analysis, particularly in such an illiquid market.”

($1 = €0.69)

For more on styrene visit ICIS chemical intelligence
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By: Peter Salisbury
+44 20 8652 3214

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