23 January 2009 22:51 [Source: ICIS news]
HOUSTON (ICIS news)--An open styrene monomer (SM) arbitrage window to Europe will slam shut as US and European sellers rush to capitalise by restarting idled capacity, a North American producer said on Friday.
Three weeks of open arbitrage have drawn large volumes off the US Gulf coast, generating demand for the lacklustre benzene spot market and pushing up the SM feedstock’s cost, brokers and traders said.
But with three weeks of material on the water and producers on both sides of the Atlantic rushing to meet the demand and rebuild inventories, a return to over-supplied conditions could be less than a week away, the US seller said.
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The SM plants were taken down in the fourth quarter of 2008 due to weak demand and falling prices, which made continued production untenable.
In the three weeks that styrene sellers have enjoyed arbitrage to Europe, US spot benzene gained more than 30%, according to global chemical market intelligence service ICIS pricing.
US Gulf coast styrene barges were talked in the mid-to-high 20s cents/lb FOB, while bids/offers for spot benzene were at around $1.23-1.28/gal FOB (free on board).
($1 = €0.77)
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