Europe spot styrene firmer following Moerdijk explosion

06 June 2014 14:44 Source:ICIS News

LONDON (ICIS)--European styrene spot levels have moved higher in the aftermath of the explosion at Shell’s joint venture styrene monomer (SM)/propylene oxide (PO) plant (MSPO-2) at Moerdijk in the Netherlands, sources confirmed on Friday, with deals for June and July done comfortably above $1,600/tonne.

The European styrene market had previously been struggling with oversupply amid Asian bearishness and imports arriving from the US, but the incident at Moerdijk saw some players scrambling for material, pushing spot levels up.

While many did not initially expect the explosion to have a major impact on availability in Europe, there has been a squeeze on EU origin material in particular.

One trader also noted that prior to the explosion, there had been some pull on Amsterdam-Rotterdam-Antwerp (ARA) volume from the Mediterranean. Combined with the expected seasonal uplift in demand from key derivative markets, many are expecting a squeeze on European styrene availability as July draws closer.

This was reflected in spot pricing, with July moving into a firm contango over June towards the end of the week. June traded as high as $1,615/tonne on Friday, while a deal for July was confirmed at $1,622.50/tonne. There is talk of deals for July delivery being done as high as $1,630/tonne this week, but these were so far unconfirmed.

“There is enough styrene in the world, so imports will make their way to Europe,” said one trader. “But for now there is a big chunk of styrene missing from the market.”

Nevertheless, there is little support from derivative markets for any sustained upturn in pricing for styrene into June and July. One downstream producer noted that there are aggressive offers for both polystyrene (PS) and expandable polystyrene (EPS) coming from Asia and Egypt, which is keeping some pressure on sellers.

By Truong Mellor