Europea SAN market waits on July styrene settlement

26 June 2014 17:31 Source:ICIS News

LONDON (ICIS)--Producers in the European styrene acrylonitrile (SAN) market will look to pass on any increases in feedstock costs to the market in July, though buyers are likely to resist as the market is expected to slow during the month, sources said on Thursday.

The market is very much in a wait-and-see frame of mind this week.

Several producers said they are waiting for the July styrene contract settlement to be agreed before they can discuss SAN price ideas, but all expect to see some upward movement in SAN prices next month.

“We have to wait to take a position on prices [for July]. From today's point of view, [SAN increases] will be in time with feedstocks,” a producer said.

An initial propylene settlement of an increase of €15/tonne late on Thursday could lead to an increase in acrylonitrile (ACN) prices for July.

Views on the size of the styrene increase in July ranged from €50-90/tonne across the SAN market, though sources stressed these are just estimates and may well be proven wrong once the July contract settles.

Buyers are also braced for an increase, though will likely try and keep any price hike to a minimum because they expect demand will start to drop off towards the end of the month because of the beginning of the summer holiday season.

“It's very difficult to say - the market won't be able to accept increase [based on demand levels in July], but benzene will go up so [the market will] have to accept,” a buyer said of the problem the market will face over raw material costs verses demand levels.

Asian suppliers are expected to offer lower prices for July, which may add pressure to some European suppliers to keep increase in line with raw material costs and not try and go for margin expansion.

Asian prices for compounding grade material were heard as low as €1,450/tonne FD (free delivered) Europe, which at least one European producer said it cannot compete with.

June demand was stable, and within expectations for most suppliers, and July demand levels are not expected to be any different to last year.

By Matt Tudball