FocusMixed predictions for Europe July SAN prices

25 June 2013 18:01  [Source: ICIS news]

LONDON (ICIS)--Players in the European styrene acrylonitrile (SAN) have mixed views on the direction of July domestic prices because of ongoing feedstock negotiations and differing views on demand.

However, while SAN producers do not see a drop in price levels compared with June, buyers will be looking for possible reductions because of expected softer demand caused by the beginning of the summer holiday period.

“Stable to maybe down,” was one buyer’s prediction for July prices, adding: “[We] certainly don't want an increase.”

A second buyer who was looking for early price ideas from its suppliers said it had received indications of increases of up to €20-30/tonne ($26-39/tonne) for July.

SAN producers are still waiting for the June acrylonitrile (ACN) contract price to be finalised. If it settles at only a small increase, it will make it hard to pass on any increases in SAN prices for July, one SAN producer said.

“There has to be some recovery in margins for SAN,” the producer said.

“If you want to improve margins based on good demand but raw materials go up, but not significantly, increasing prices can be hard,” it added.

Demand levels are looking stable for July so far, but on the buy side there is speculation that this may change later in the month because of the holiday period from July to August, when demand has traditionally dropped in the past.

“Demand is quite stable, but it's holidays in northern Europe [soon],” a buyer said.

Producers were more optimistic, with one adding it was seeing slightly increased demand in the last week of June.

A second producer was more optimistic on July demand levels because of recent news that a German car manufacturer was thinking about taking on extra staff because of additional demand, particularly from north European and overseas markets.

“We thought automotive [production] would go down but [these] projections [have not taken] place yet,” the producer said.

The market is waiting for the July styrene contract price to settle, which will not take place until the benzene contract has been agreed.

Benzene spot prices started to fall on Tuesday ahead of the contract settlement, but as of last week, spot styrene was continuing its recent bullish run.

Looking at the Asian market, a trader said that there is still a lot of South Korean material available to European buyers.

One buyer said that Asian SAN producers have indicated initial increases of €30-40/tonne for material delivered in July.

There was not much concern from the European market regarding the recent credit developments in China. Most European players agreed that it was far too early to predict any outcome from events in Asia, but added they will be watching the situation closely.

($1 = €0.76)



By: Matt Tudball
+44 208 652 3214



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