27 December 2010 13:30 [Source: ICIS news]
By Truong Mellor and Julia Meehan
“January is looking firm on both benzene and styrene,” said one trader. “It appears to be driven by demand and not crude.”
Delegates at the 9th European Aromatics & Derivatives Conference in
Strong demand from the styrenics chain was the focus of some for 2011, with players noting that the substitution of polypropylene for polystyrene had come to a head. Others were optimistic about some of the smaller downstream sectors, like expandable polystyrene, for avenues of future growth.
With reformers expected to run at lower rates next year due to weakening demand for gasoline, many expected benzene availability to remain precarious in 2011.
Some were predicting that imports into
“Demand will stay strong, and we could see some arbitrage opportunities for European players open up in 2011,” said one trader.
While it was still too early to gauge the impact of new operations, such as Styron and Styrolution, on the market, several players were expecting spot activity to pick up in 2011. With fewer integrated players,
“The status quo will continue to an extent, because it is difficult for these new bodies to completely remove themselves from their parent companies,” said one source. “However, we might see some more entrepreneurial behaviour.”
This will prove crucial for styrene players in a market that will be increasingly tough, and further consolidation plans may emerge in 2011. Despite the current bullishness, there were still some observers that continued to exercise caution.
“We have seen a hike in crude prices in 2010 despite supply/demand fundamentals,” said one consultant. “There are record stocks in the
There was also some concern that continued high pricing on crude and energy would begin to eat into discretionary consumer spending, which would in turn have a depressing effect on key end-use markets.
One source felt that the market now risked moving into “demand destruction” territory, adding that strong and sustainable downstream demand was unlikely.
January has traditionally been a strong month as players seek to replenish inventories following the holiday period when stocks are run down. Despite talk of a bullish opening to the year, recent indications regarding the automotive, packaging and housing industries in
However, there was some optimism that underperforming domestic sectors could be counterbalanced by strong export demand in 2011. Sources noted that markets such as Asia and e
With volumes from the
Toluene was predicted to remain balanced, with no major structural changes on the horizon. Demand from emerging chemical markets such as
In the paraxylene (PX) market, downstream demand for purified terephthalic acid (PTA) and polyethylene terephthalate (PET) was expected to remain strong in 2011. Buyers of PX were unconcerned about feedstock availability.
“There will be enough PX in the market. Producers will simply run in order to meet our demand. There are only a few PX buyers left so availability should not be a problem,” a major buyer said.
However, in the orthoxylene (OX) market, a major buyer and producer of phthalic anhydride did sound concerned about availability. This was partly attributed to strategic decisions upstream, with questions over whether refineries would continue to see value in producing OX.
“The availability of raw materials [in 2011] is a big question mark. Are refineries willing to produce OX?” a producer said. This was also partly attributed to OX producers wanting to increase captive use of the material.
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