06 June 2012 11:34 [Source: ICIS news]
LONDON (ICIS)--Despite weak derivative demand across the styrenics chain, ongoing tightness for benzene in Europe is helping support the styrene market this week, players said on Wednesday.
With June bids as low as $1,250/tonne (€1,000/tonne) on Monday June 4, the European styrene market has quickly pushed back up. Deals were done at $1,300–1,320/tonne on Tuesday June 5 and the market has continued to gather momentum.
“Benzene prices will underpin the styrene market for a while but who knows for how long,” said one trader.
June benzene deals were done earlier this week at $1,230–1,260/tonne for delivery at any time during the month. There is still a firm premium for the first half of June, with unconfirmed deals heard closer to $1,300/tonne earlier in the week.
“It is still tight for the front end of the month, and nobody wants to hold inventories,” one trader said.
As benzene values for June crept up to $1,300–1,350/tonne on Wednesday morning, this put more upward pressure on styrene. However, ideas on where the market was were opaque at best.
One trader said it had seen a June range for styrene on Wednesday morning as high as $1,400–1,500/tonne FOB (free on board) Rotterdam but this was not widely confirmed.
“I think this is a temporary period which might last one or two days,” the trader said.
Other players saw the market for June still below $1,400/tonne, and did not expect it to move up as high as $1,500/tonne because of poor derivative demand and healthy PO/SM (propylene oxide/styrene monomer) production output.
While benzene numbers have resisted much of the bearishness prompted by crude losses since the middle of May, the market in Europe is expected to drop later in the month with the arrival of imports from both Asia and the US.
One source in Asia, however, said that after an initial shipment of 15,000 tonnes was loaded for the ARA (Amsterdam, Rotterdam, Antwerp) region, exports were largely bound for the US, where prices were up as much as $0.25/gal for both June and July.
One trader last week anticipated that up to 45,000 tonnes of material had been shipped to Europe from the US Gulf, which is expected to arrive by the end of June.
So with styrene prices currently supported by a precarious benzene market, many players are exercising caution this week.
“It is a minefield,” said one styrene trader. “Those who want to play in it could find themselves blown to smithereens.”
($1 = €0.80)
Follow Truong Mellor on Twitter for daily tweets on the aromatics markets
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