Europe spot styrene at record highs ahead of Sept

LONDON (ICIS)–Prompt tightness has pushed European styrene spot prices up to record highs this week ahead of September barge contract negotiations, sources said on Wednesday.

The upturn began last week with a midweek rallying for August, as bids reached $1,740/tonne (€1,305/tonne). August deals were confirmed last week at $1,730/tonne and $1,740/tonne.

Several traders had noted that September could see renewed bullishness on pricing amid at least one production outage and better demand from downstream markets following the holiday season.

By the end of last week, however, the upturn was far more pronounced. A deal for September was done at $1,820/tonne, and this pushed bids for August and September as high as $1,840/tonne, although no further business was confirmed by the close of business on Friday August 23.

“People have to have the product on 1 September, and today is the last day they can buy because of the nomination period,” explained one source on Friday.

The upcoming lock strike in Germany has also seen several players push delivery forward in a tight market, which has added further upward pressure on pricing.

This week opened with continued bullishness for prompt material following a prompt intertrade August deal done at $1,870/tonne.

While spot numbers for September had started to show signs of a decrease earlier this week, with some backwardation for the second half of the month also emerging, by the close of business on 27 August several traders saw September bids back up at $1,840/tonne amid continued supply constraints.

All of which is likely to weigh heavily on the upcoming September barge contract price talks.

While some minor upward movement is expected for feedstock benzene next month, the benzene/styrene spread has remained ample for several months already.

The crucial issue will be the state of the styrenics derivative markets, according to numerous players.

While some improvements in demand are expected for September, with industry returning en masse following the summer holiday period, any further price increases could have a serious adverse effect on offtake.

“Some downstream players have CP [contract price]-related pricing for sales, but they are still 50% exposed to the spot market,” said one industry source. “That will be tough this September.”

($1 = €0.75)