OUTLOOK ’14: US styrene expected to be more tied to market conditions

23 December 2013 17:00  [Source: ICIS news]

HOUSTON (ICIS)--US styrene trade participants expect 2014 to see supply remain tight alongside moderate growth in some consumer areas. In addition, some suppliers expect to see more of a disconnect between the styrene market and feedstock benzene costs.

These market expectations are somewhat different from a year earlier, when styrene trade participants did not expect to see much improvement in 2013 market conditions, citing continued weak domestic and overseas demand.

But for much of 2013, styrene supply was tight because of production issues, not just in North America but globally.

US styrene spot prices in 2013 peaked at a yearly high of 78 cents/lb in February on the back of stronger feedstock benzene prices. After moving down in the second quarter, spot moved up again to 77 cents/lb in late July, where it remained for 10 weeks.

The late summer spike in styrene spot prices was also in line with seasonal demand, which typically emerges in September ahead of the winter retail holiday shopping season.

After falling again in October and November, styrene prices moved back up in December on the back of tight supplies and stronger benzene prices.

For 2014, the tight market expectations are not just for North America but global, sources said.

Currently, two North American suppliers are having production issues that will continue into the first quarter of 2014.

Shell remains on force majeure on styrene out of its facility in Alberta, Canada, since late November, while Styrolution’s Texas City, Texas, facility remains on a 65-day shutdown, which began in November.

There has been no word on when Shell will come off its force majeure.

Styrolution’s Texas City facility is expected to be back online by mid-January.

The tight market in the first quarter will likely keep upward pressure on styrene spot prices, in addition to some market growth alongside global GDP growth.

But trade sources noted that they expect to see styrene demand growth from the unsaturated polyester resins (UPR) industry, especially out of Latin America.

“[UPR] had the strongest growth rate this year,” remarked one US styrene supplier.

Earlier this year, Latin American trade sources at the Latin American Petrochemical Association (APLA) annual meeting said that UPR demand out of South America is surging, as the region expects economic growth in 2014.

Suppliers and consumers were also in agreement that the styrene industry may see more of a disconnect between feedstock costs, as the industry will be more tied to market conditions. US styrene market participants added that they expect more contracts being tied to market conditions rather than raw material costs.

One US styrene producer even said about the move towards market-based contracts that, “It’s already happening.”


US stryene prices

By: Brian Balboa
+1 713 525 2653

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