19 June 2009 12:19 [Source: ICIS news]
By Madelon Ten Cate
LONDON (ICIS news)--European styrene producers have been left with negative margins due to rising upstream costs, a lack of export opportunities and weak buying interest, sources said on Friday.
“If you look at where current July spot numbers are and combine that with the weak [?xml:namespace>
On 18 June, spot July styrene deals were done at $935-940/tonne (€673-677/tonne) FOB (free on board) Rotterdam, while some sources reported trades done at even lower levels.
On the same day, July benzene traded twice at $805/tonne CIF (cost, insurance and freight) ARA (
Market sources said that a spread of around $200-250/tonne is profitable.
“You get the idea that producers would start buying spot styrene instead of producing it,” one trader said, while another trader added that “producers will try to reduce their losses”.
A seller in
However, contractual obligations and a contango in to July meant that any decisions would not be taken light-heartedly.
“[The] European perspective is that benzene is tight,” the producer said. “Nowadays, prices are mainly based on speculation, and I don’t see any values come off in July”.
Another producer said that its “operating rates were already adjusted to market reality” and that it did “not see any reason to change now”.
Sources said the arbitrage to other regions was shut, although ongoing price increases in
On Friday, global chemical market intelligence service ICIS pricing assessed Asian styrene at $1,045-1,055/tonne FOB
A trader said that this amount could, in theory, be enough to ship material, although vessel availability was proving difficult.
A European buyer, nevertheless, said that it saw some downsides to higher Asian values.
“If Asian levels continue to rise, then it is possible that all
It appears that July will not prove any easier for European styrene producers, with the upstream ethylene contract expected to rise by €40-90/tonne and benzene already traded more than €50/tonne above the June contract price.
Earlier in the week, some downstream polystyrene players said that an increase of €20-30/tonne for July styrene contracts was likely, however, it was doubtful they could achieve this.
“We have had our margins squeezed in June already, there is no option for us then to fully pass on any increases we might see in July,” a producer said.
($1 = €0.72)
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