Low Europe styrene output fails to halt spot slide

13 November 2008 16:57  [Source: ICIS news]

LONDON (ICIS news)--Spot styrene prices fell to a 68-month low in Europe on Thursday despite reports from producers and consumers that production was down by as much as 50-60%.

A December trade was confirmed at $635/tonne FOB (free on board) Rotterdam, with January business also reported at $605/tonne FOB Rotterdam.

The lower deal marked the lowest point seen in the styrene market since the week ended 6 March 2003, when trading was conducted within a $590-610/tonne FOB Rotterdam range, according to global chemical market intelligence service ICIS pricing.

Market participants expressed both surprise and concern over the 68-month lows, with many having thought that the recent five-year trough had been a bottom to the market.

Producers in particular expressed surprise that values continued to fall, given the level of production in Europe.

“Production in Europe is down about 50%,” said a source at one major producer. “We are running at 60% and I know that our competitors are all running at 50-60% at least.”

Other producers were reluctant to disclose their exact production rates but several agreed that the vast majority of production was running at a technical minimum, with a number of lines shut completely.

Dow’s Terneuzen production unit had one line down, and Repsol had halted production at Tarragona due to “mechanical problems”, sources said.

“It shows how bad demand is,” said one trader, who pointed to similar lows in upstream benzene, naphtha and crude oil, all still on the downtrend.

Reports of an 18,000 tonne consignment of styrene due to arrive in Europe from South Korea in late November or early December were also seen as pushing the market down.

“We spoke to them this morning, and not even half of this has been sold,” said a source at one major producer.

Further volumes were seen as coming in from oversupplied Asian and US producers, with Europe and styrene still valued above other regions.

($1 = €0.80)

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By: Peter Salisbury
+44 20 8652 3214

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