Europe styrene market eyes Asia for exports as spot levels ease

16 October 2013 11:18 Source:ICIS News

By Truong Mellor

LONDON (ICIS)--European styrene spot levels have started to ease this week alongside falling benzene prices, seasonally slow demand and global losses, although the arbitrage window from Europe into Asia remains open with players looking to capitalise on it.

With Asian spot numbers for December at $1,680-1,685/tonne CFR (cost and freight) China and European values moving below the $1,600/tonne FOB (free on board) mark, there is an opportunity for exports out of the ARA (Amsterdam-Rotterdam-Antwerp) region into Asia, with freight and administrative costs in total around $100/tonne (€74/tonne).

Spot values in Europe this morning were at $1,570-1,585/tonne FOB Rotterdam for October, while November was slightly higher with offers at $1,590/tonne.

Several European traders said they are fixing vessels for export, and one major consumer estimated that up to 20,000 tonnes could be leaving Europe for Asia in the coming weeks.

However, prices in Asia have been gradually easing off this week amid a growing sense of bearishness from derivative markets as the year draws to a close.

“A lot will depend on whether the arbitrage window will stay open,” the consumer added. “If not, that material will have to be sold into Europe so we could see prices here drop even further.”

Despite one southern European producer going into turnaround this month, several sources have not seen any significant impact on the domestic market. Demand from key derivative markets remains slow, and the rest of the fourth quarter is expected to be subdued as players work down inventory levels ahead of year-end.

However, with a major turnaround in the US coming up for November and December, which could potentially limit any export volumes from the region between now and the end of 2013.

There is some anxiety that, combined with the ongoing turnarounds in Europe, ARA pricing could see another sharp upturn if players suddenly have to cover short positions amid fewer US imports towards the end of the year.

"We could be setting ourselves up for another spike, even with low demand," said one buyer.

($1 = €0.74)

By Truong Mellor