05 November 2013 15:17 [Source: ICIS news]
LONDON (ICIS)--European styrene sentiment for November remains subdued, sources said on Tuesday, with low derivative offtake counteracted by some ongoing supply concerns.
While spot pricing saw a spike last week driven by prompt availability concerns, several players felt that current pricing is not sustainable given the huge spread of styrene over benzene and the health of key derivative markets.
“A market like ABS (acrylonitrile-butadiene-styrene) is doing okay but not great,” said one trader. “The real issue right now is supply not demand.”
There are several factors in the styrene market that are keeping pressure on prompt availability: Weaker-than-expected propylene oxide (PO) demand is keeping PO/SM (styrene monomer) output curtailed, fewer imports from the US, and exports from the ARA (Amsterdam-Rotterdam-Antwerp) region to the Mediterranean in the fourth quarter have also helped tighten supply amid an ongoing maintenance turnaround in southern Europe.
“We have seen a lot more enquiries from the Spanish market, so it seems like it is very finely balanced there,” said one player in the distribution sector.
Other traders noted ongoing production issues in the Middle East, a tighter Turkish market owing to fewer imports from Russia as well as renewed exports to Asia for December as all contributing to continued pressure on availability.
Nevertheless, other players felt that current styrene numbers were still too inflated, something it expects to see corrected over the course of the month.
“Benzene seems to be falling further this month, so the spread with styrene is bigger,” one consumer said.
“It can’t be maintained, and by the second half of November once everyone is covered, styrene prices are likely to drop.”
The lower seasonal offtake among styrene derivatives was acknowledged in the November barge contract decrease of €85/tonne ($115/tonne) earlier this week, with several players agreeing that this would help downstream markets improve demand in the fourth quarter.
November styrene spot offers were at $1,640/tonne on a FOB (free on board) basis on Tuesday following a prompt deal done at that level on Monday 4 November. However, bids were much lower at $1,600/tonne.
Offers for both December and January were at $1,610/tonne but not met with any firm buying interest.
($1 = €0.74)
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
Asian Chemical Connections