17 February 2012 12:31 [Source: ICIS news]
LONDON (ICIS)--European styrene prices saw a sharp upward turn late on Thursday to breach the $1,500/tonne (€1,140/tonne) mark, as gains were supported by firmer crude levels, balanced availability and buying interest from industry players, sources said on Friday.
The market has been pushed up in February by rising feedstock costs and keener buying interest from suppliers due to the poor production economics caused by high benzene prices.
While February values had closed in on $1,500/tonne last week, by close of business on Friday 10 February, prices had fallen back down to $1,440-1,450/tonne FOB (free on board) Rotterdam.
This week saw February deals move up from $1,460/tonne to $1,490/tonne by Wednesday 15 February, but several sources believed the upward trend was unsustainable.
“$1,500/tonne is too high for the current level of demand,” said one trader earlier this week. “If feedstocks falter at all, the styrene market will move back down.”
However, by the close of business on Thursday, European benzene prices for February delivery had started to come off, the market valued at $1,240-1,260/tonne, down $20/tonne from earlier in the week.
Despite this, the styrene market saw a rallying of prices overnight, with February trading at $1,508/tonne and March deals reported as high as $1,520/tonne.
Players said that there was some buying interest from producers but also some potential short covering for the upcoming weeks, which spurred the upward movement.
Offers for February material were as high as $1,520/tonne this morning, although buyers remain anxious about raising bids above $1,500/tonne. There was talk of a February deal at $1,515/tonne but this was so far unconfirmed. March was in a slight contango at $1,505-1,525/tonne.
While the spike in styrene values has helped restore some of the margin with benzene that has been eroded in the first quarter of 2012, aromatics players appear far from confident yet.
“[A] $250/tonne [spread over benzene] with the likelihood of yet another huge increase in ethylene doesn't have the producers out in the streets celebrating,” said one trader.
($1 = €0.76)
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