Price and market trends: Europe styrene firm but doubts linger

28 June 2013 09:58  [Source: ICB]

Some players expect prices to decline into July on higher production and continued demand weakness

European styrene spot numbers are still bullish, sources said on 18 June, as prompt availability remains a concern, although there is some expectation the market could ease sharply as July approaches.

Deals for June delivery were done the week ended 14 June as high as $1,730/tonne (€1,298/tonne) on an FOB (free on board) basis, with keen buying interest seen from industry players despite a spread of nearly $400/tonne with feedstock benzene.

"There is clearly a production issue," said one downstream source. "Why else would anyone buy with these kind of numbers over benzene?"

The bullishness continued, with June deals done as high as $1,735/tonne on 17 June as one industry player was still actively looking for material.

A sharp spike in the Asian market also supported the uptrend, with emerging production problems in the region seeing traders push the market up, although this appears to have eased somewhat.

Whether these current prices for European spot styrene parcels will hold is unclear, and several traders and consumers are braced for a sharp drop once the current wave of purchasing ends.

 
One expandable polystyrene (EPS) producer said it was already being offered cargo from the US for delivery by the end of July and early August at prices significantly lower than $1,700/tonne, although intertrade deals for July were done late on 14 June as high as $1,720/tonne.

"The US imports are coming to Europe, but not until much later," said one trader.

SOME EXPECT FALL
Other players remain adamant that styrene prices will see a fall as July draws closer, with ramped up production output as suppliers take advantage of the healthy benzene/styrene spread and no clear change on demand levels seen from key end-use markets like construction.

While offtake was looking healthier in June than at any other point this year, several consumers were quick to point out that the first half of 2013 was weak owing to prohibitively high styrene monomer costs ahead of the turnaround season.

This was illustrated earlier in June with the announcement from INEOS that it intends to stop production of EPS at its site in Marl, Germany, at the end of 2013.

INEOS said demand for EPS products has fallen as a result of the European construction sector suffering from adverse economic conditions, adding that the plant's operating costs have also been affected by the recent closure of the group's styrene monomer and polystyrene units in Marl.

One distribution source said that European construction demand has been underwhelming so far in 2013, and that by July several areas in western Europe will already be slowing down for holidays.


By: Truong Mellor
+44 208 652 3214



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