27 December 2012 18:40 [Source: ICIS news]
HOUSTON (ICIS)--US styrene trade participants do not expect to see much improvement in market conditions in 2013, citing continued weak domestic and overseas demand.
The outlook is more straight forward compared with the outlook for 2012, which was mixed because of uncertainty regarding the global economy.
In 2012, the styrene market was volatile through the first-half of the year. But prices gradually moved higher through the second-half on record-high benzene prices.
The increase in styrene contracts during the second half were more driven by strong feedstock costs than actual demand.
Seasonal styrene demand typically picks in April and May ahead of the summer packaging season, and again in September and October ahead of the winter retail holiday shopping season.
However, the expected uptick in demand did not materialise has much as suppliers had expected. More recently trading activity had been limited early in the fourth quarter because of weak domestic and overseas demand, specifically Asia.
These soft market conditions are evident by recent production and inventory statistics from the American Fuel and Petrochemical Manufacturers and import/export data related by the International Trade Commission (ITC).
Because of the poor demand, there was even some discussion in 2012 about styrene producers looking to sell off their feedstock benzene to capitalise on recent record high benzene prices.
Despite the demand outlook, some producers expect to see slight improvement in production rates.
Hurricane Isaac impacted styrene production in September. Total Petrochemicals' Carville facility in Louisiana and Americas Styrenics St James facility in Louisiana were briefly shut following the hurricane.
Currently, Styrolution's 485,000 tonne/year styrene plant in Texas City, Texas, is shutdown and is expected to remain offline until January.
Meanwhile in the feedstock benzene market, many aromatics said they believe the US benzene market sill remain strong in 2013, citing tight supply availability and the continued global financial situation.
The record-high benzene prices seen in 2012 put upward cost pressure on the styrene market. Should benzene prices remain strong in 2013, the styrene market could see more of the same.
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