05 November 2008 16:40 [Source: ICIS news]
(adds buyer confirmation and detail throughout)
LONDON (ICIS news)--A third European November barge styrene settlement has been concluded down €462/tonne ($600/tonne) or 40% from the contract partners' October settlement, a major producer and consumer confirmed on Wednesday.
“Our November ’08 CP (contract price) is done at €700/tonne,” the source said. Barge styrene contracts are concluded on a free delivered (FD) northwest Europe (NWE) basis.
The partners had settled their October contract at €1,162/tonne FD NWE.
Many buyers and sellers had admonished the initial settlement, deeming it “absurd” and saying it created negative cash margins for producers.
Market participants attributed the drops – considered to be unprecedented in monthly petrochemical contracting – to collapsing spot values, a €481/tonne drop in November benzene contracts and failing downstream demand.
“There are daily announcements of capacity cuts from our customers’ side,” the consumer source said.
“The construction business has hit a brick wall.”
“The kind of changes that happened in October are never good,” he said, referring to the more than 50% collapse in spot prices.
“Crude is now at $60/bbl [last year’s price], and styrene prices are where they were five years ago,” the consumer source said.
Three barge styrene contracts and one truck customer reference price (CRP) have traditionally been settled in monthly European styrene.
A truck CRP of €777/tonne FCA (free carrier) ?xml:namespace>
($1 = €0.77)
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