LONDON (ICIS)--Availability concerns have pushed European styrene spot prices up to their highest levels since August 2008 this month, although there is emerging speculation that the spike may begin to erode demand from key derivative markets, sources said on Thursday.
September cargo has traded this week as high as $1,670/tonne (€1,336/tonne) FOB (free on board) Rotterdam, with strong polymer demand and reduced domestic production pushing up price ideas and catching many by surprise.
Industry has also been actively pursuing material this week, because of lowered production rates in recent months owing to bullishness on benzene, and potential relief from US imports will now be delayed because of Hurricane Isaac, several traders said.
“With the hurricane in the US no material whatsoever will come to Europe at the moment, so whoever is short in Europe will have to pay,” said one styrene trader. “At least that is how it looks.”
However, other traders disputed this. There was some speculation that while some exports from the US Gulf region would be delayed until the end of September or even early October, some 30,000 tonnes of material was already en route to Europe, which would help alleviate some of the current tightness.
There is even a sense in the market, at least among some players, that the current bull run on pricing for September has started to soften the appetite among buyers, with many now feeling that with end-use sectors still failing to show any meaningful signs of recovery, there is simply no point in running units and producing material only to be operating at a loss.
($1 = €0.80)