High styrene prices keep Europe SAN demand low

17 September 2013 17:52  [Source: ICIS news]

LONDON (ICIS)--Higher feedstock costs and a reluctance to build styrene acrylonitrile (SAN) stocks have kept European September SAN demand low, players said on Tuesday.

September’s demand has not reached the levels buyers and sellers were expecting so far this month, sources said.

“I would say we are behind plan on SAN at the moment,” a producer said, adding: “It’s not a serious concern at this stage.”

The producer has reduced some of its SAN train run rates to take into account the lower demand levels.

Uncertainty about the geopolitical situation in Syria and its impact on crude oil and naphtha prices earlier in the month, together with record-high styrene spot prices at the beginning of September, could have led some SAN consumers to believe feedstocks are currently in a pricing bubble.

This may have put buyers off from purchasing stock at what they believe to be inflated rates, preferring to wait and see if feedstocks drop.

“People are still holding on to see what happens next month,” a SAN producer said of why September demand was not as high as expected. 

“Some people don't think to believe the upward trend [in feedstock prices] will continue,” the producer added.

September SAN demand levels could subsequently have been affected as consumers try and get by on their existing stock whilst waiting for prices to drop.

Buyers are struggling with end-use market demand, with lower-than-expected volumes hitting their sales figures.

“It's going to be a long end to the year,” a buyer of injection moulding SAN said about the idea that demand will not pick up before the end of 2013.

“The months tend to vanish very quickly when sales are not going,” it added.

However, there was some optimism that October could still prove to be a better month in terms of demand as buyers who have managed to get by on depleted inventories return to the market to replenish stock.

SAN players will be closely watching the styrene spot price for the rest of September as they attempt to gauge the possible direction of the October contract price.

($1 = €0.75)

By: Matt Tudball
+44 208 652 3214

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