Europe November styrene expectations vary widely

30 October 2009 14:52  [Source: ICIS news]

LONDON (ICIS news)--Expectations regarding the European November styrene contract price vary greatly, as upstream movements support an increase while lower spot values support a decrease of more than $100/tonne (€68/tonne), sources said on Friday.

Confirmation was received this week that the upstream ethylene contract was agreed €27/tonne down from October at €833/tonne, while benzene contracts were likely to settle up by approximately $75/tonne or €50/tonne.

Taking into account just the upstream costs, this would mean that the November styrene contract should go up by around €30/tonne, sources said.

“During the last few months, styrene negotiations focused mainly on raw material movements,” a producer said.

“I believe the same method should be applied this month and resist any view that the November contract price should go down based on spot levels,” the source, who expected an increase of about €10-20/tonne, added.

Several other players leaned more towards a rollover or a slight movement either up or down, as downstream demand remained weak, pushing spot values lower, with the expectation that numbers would continue their downward trend towards the end of the year.

“December will be a weak month,” a buyer said. “There has also been quite some material coming in from the US and I have received a lot of offers from traders,” the buyer added, while explaining that there was considerable length in the market.

Another consumer said that the lower spot values should definitely be reflected in the new contract price. “The evolution of raw materials does not play a big role in contract negotiations,” the source said.

The buyer added: “Spot [values] moved down by more than $100/tonne or €90/tonne since the beginning of October, and those are the decreases I expect to see for November.”

Meanwhile, several downstream polymers players expected an increase for November styrene prices. "Benzene is the main driver for styrene," said a major polystyrene (PS) producer, adding that he therefore expected an increase in November.

The November styrene contract price was expected to settle on or after 2 November.

Styrene contracts are agreed on a free delivered (FD) northwest Europe (NWE) basis.

($1 = €0.68)

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By: Madelon Ten Cate
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