Europe benzene bullishness wanes as styrene shows signs of recovery

25 April 2013 10:33  [Source: ICIS news]

LONDON (ICIS)--European styrene spot prices started to see signs of recovery this week, sources said on Thursday, although some length remains amid poor derivative demand.

April offers opened the week at $1,540/tonne (€1,186/tonne) FOB (free on board) Rotterdam but could not find any firm bids initially, while May held a slight contango as offers reached as high as $1,575/tonne before edging back down.

Upstream benzene prices were still on a bullish path during the first half of the week, with rumours of a production problem at one European aromatics unit pushing up prompt spot values. A premium emerged for the first half of May, and the market quickly breached the $1,400/tonne CIF (cost, insurance & freight) ARA (Amsterdam-Rotterdam-Antwerp) level.

However, the dynamic of the market started to reverse in midweek, with the upward trajectory of benzene losing steam while styrene prices began to creep back up.

April styrene deals were done at $1,535/tonne and then later in the week at $1,555/tonne. May traded at $1,545/tonne and $1,550/tonne, but by Wednesday April 24 was said to be trading as high as $1,575/tonne, although this is unconfirmed.

“The styrene weakness has been overplayed,” said one major European styrene player. “Those needing prompt benzene have been booked now. So expect to see some more normality for a period.”

With domestic styrene supply lengthening over the last few weeks, there has also been a concerted effort from traders to move material out of the region. Sources said that as much as 20,000 tonnes has been shipped to Asia to capitalise on firmer pricing there, supported by improved Chinese demand for expandable polystyrene (EPS).

Despite the stirrings of recovery in Europe, styrenics demand remains under pressure, with April material still being sold at lower numbers in the distribution market.

“There has been no real improvement on demand,” said one trader, adding that it had seen deals for smaller 100 tonne parcels for May delivery done as low as €1,230/tonne on an FCA (free carrier) basis.

“The weather is better, but we don’t have too much faith in historical data and trends anymore,” another source said.

So, even as spot prices start to pick up again, there is still a sense of bearishness among consumers.

“The markets are still impossible downstream,” said one styrene purchaser. “Stocks are high and this current blip can easily fall away. Everybody is struggling to forecast what's going to happen. It's been a very volatile month.”

($1 = €0.77)


By: Truong Mellor
+44 208 652 3214



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