OUTLOOK '11: North American styrene producers see stronger exports

27 December 2010 17:55  [Source: ICIS news]

By Brian Balboa

HOUSTON (ICIS)--Citing a strong cost advantage for raw materials such as natural gas, North American styrene producers say they expect 2011 to be business as usual, with healthy exports and no major price movements in the market.

Rather, styrene producers have said any major increase in prices would be more tied to US currency and crude oil values, and growth would move with the US gross domestic product (GDP).

“If the Fed keeps cheapening the dollar, then we will see crude move up to $100,” said one North American styrene producer.

Feedstock benzene prices also track crude prices, and crude at $100/bbl would likely put upward price pressure on the benzene market, which could trickle down into the styrene market.

Producers anticipate a normal market in feedstock benzene, and most agreed that availability would continue to be good in 2011, with the US being a net importer of benzene from Asia.

Feedstock ethylene, however, could be a different story entirely for the styrene market. A second major styrene producer pointed to stronger ethylene spot prices the fourth quarter as a potential issue.

“I think ethylene is not as certain (as benzene),” the styrene supplier said. “After last year you had a major ethylene blip that increased the price like 40% to 50%. Typically ethylene is a lot more stable.”

Styrene consumers seem to have a pessimistic outlook on the market.

One downstream styrene consumer said it anticipates spot prices would stay high in 2011, citing December styrene prices in the mid-to-high 50 cents/lb range, compared with a year earlier when prices were in the high 40-to-low 50 cents/lb.

The consumer also cited stronger feedstock benzene spot prices in December as a reason styrene prices would increase.

Benzene spot prices in December moved from $3.29/gal early in the month to $3.65/gal, following an increase in crude futures.

North American producers are already looking overseas to Asia for an expected uptick in demand. In 2011, China was expected to bring 2m tonnes of styrenic resins capacity on stream, while adding 400,000 tonnes of styrene monomer.

That wide gap was expected to result in higher styrene demand and higher prices in Asia.

Through October, US styrene exports were at 1.2m tonnes, according to data from the US International Trade Commission (ITC), down 7% compared with the same time period in 2009.

Producers have cautioned, though, that an increase in US styrene exports to Asia could make domestic inventories tight.

Major North American styrene producers include American Styrenics, Shell Canada, INEOS NOVA, Westlake, and LyondellBasell.

For more on styrene visit ICIS chemical intelligence
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By: Brian Balboa
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