01 March 2010 15:57 [Source: ICIS news]
LONDON (ICIS news)--Negotiations for the European March styrene barge contract were under way this morning, with price ideas varying from anything between plus €14/tonne to plus €70/tonne ($19-96/tonne), sources said on Monday.
“Considering where spot is now compared to when February settled, we are looking for an increase of between €60-70/tonne,” said a seller who was not involved in the talks. February had been agreed at €1,002-1,005/tonne FD NWE.
The player added that styrene producers’ margins had also suffered recently.
Others expected March to settle a little lower. “An increase of €10-15/tonne will do,” one trader said.
“We agree on feedstock increases of around €14/tonne, but how much above that we will need to go is unclear at this stage,” a consumer said.
An initial upstream March benzene contract was settled on 26 February at €741/tonne or $999/tonne FOB (free on board) NWE (northwest ?xml:namespace>
At least one benzene seller aired his frustration about the settlement, with another reportedly going into fallback position, also due to discontent with the figure. One of the sellers said that players had used the “wrong arguments” to achieve a lower number.
Although it seemed that most styrene players agreed this would lead to a feedstock increase of €14/tonne, it appeared that styrene negotiators could not immediately see eye to eye as to which other factors should be taken into consideration.
Several players said that it was clear the domestic market had tightened during February. Indeed, the domestic styrene market was suffering from several production issues recently.
Last week, Shell Chemical had to declare force majeure on styrene out of its Moerdijk unit, after technical problems at its ethylene cracker in the same location meant the company was suffering from feedstock supply issues.
At the same time, it appeared that another European seller also had problems producing sufficient amounts of styrene, after a strike at its refineries had led to similar feedstock issues. A source at this company expected the problems to last for “several weeks”.
During the month of February, up to 20,000 tonnes of styrene was also reportedly exported to Asia and
The above factors had led to stronger styrene spot prices during the month of February. When the February barge contract was settled, spot prices were seen around the $1,200s/tonne FOB
On Monday morning, prices were more than a $100/tonne up from then, when a prompt deal was recorded at $1,335/tonne from trade to industry.
The stronger dollar also meant that, in euro terms, the contract price was likely to see a bigger than expected increase, one player said.
The styrene barge March contract was expected to settle later on Monday.
($1 = €0.73)
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