Mild winter weather across the region has boosted construction activity, improving downstream demand
Improved downstream sentiment in Europe and a firmer Asian market are likely to support an upturn for European styrene in April, sources said on 25 March.
“It is going to happen, it is just a question of when,” said one styrene consumer.
While the first quarter of 2014 saw relatively mild weather which helped support construction activity in Europe compared to previous years, players are expecting a seasonal uplift from April onwards.
One expandable polystyrene (EPS) producer said that it was already seeing some improvements in demand in March, certainly compared to the same period in 2013, but nothing overly significant.
The EPS producer noted there have only been two days of construction activity lost to adverse weather conditions this year compared to thirty-two over the winter period in 2013, but added that this could be a displacement of work from later in 2014 brought forward to capitalise on the mild weather.
The effect could be an overall flattening of construction demand and activity over the course of the year.
European spot numbers have edged back over the $1,600/tonne FOB (free on board) mark this week, with a prompt March deal done at $1,605/tonne and an April deal done at $1,610/tonne.
While April prices in the Asian market have reached the $1,650/tonne CFR (cost and freight) China level, there are still mixed signals regarding the wider macroeconomic health of China, cheap Middle East imports and high inventory levels weighing down on the region.
“We haven’t really seen any major impact from the turnarounds there yet,” said one source.
Another EPS supplier remains cautious ahead of April: “We don’t expect any miracles next month. EPS was okay in Q1 this year so any pick-up in demand will be limited.”
Yet despite this, the overall mood in Europe is positive for the upcoming month, with the anticipated upturn in demand compounded by potential restrictions on supply.
One major supplier is thought to be undergoing a turnaround by late April or early May for at least three weeks, although this has yet to be confirmed.
While there is speculation that the supplier could run other units harder to compensate, sources note that PO/SM (propylene oxide/styrene monomer) production is likely to be dialled down in the coming weeks as demand for polyols and de-icer slows in the run-up to summer.
“There is still a premium for short-term material,” said one benzene trader. “Pipelines are empty. Cracker margins are a little better but nothing major.”