Europe PS prices resist full SMCP drop in October

Focus article by Truong Mellor

LONDON (ICIS)–Despite the drop of €210/tonne for the October styrene barge contract, sources in the European polystyrene (PS) market have reported considerable resistance to a similar reduction owing to strong demand and some emerging tightness in the region, sources said on Thursday.

Styrolution reported that it is facing an issue with the restart of one of its lines at Antwerp following a scheduled turnaround last month. A source at the company said it has not declared force majeure, but is now in a tight position.

“We have a few exceptions depending on grade, but have now informed customers that we are closing order books for October,” the source added.

The company has a total annual capacity of 475,000 tonnes at the Antwerp site, according to ICIS plants and projects data.

One PS producer said that October demand was already the second highest month for demand so far this year, with only March proving to be higher from a demand standpoint.

The producer added: “The whole industry has decreased stocks over September and its entering October with low figures.”

However, some buyers questioned the current bullishness being seen. Distribution market sources have reported that some PS buyers are taking less volume than usual for October. Many seem willing to pay a surplus for smaller order volumes to simply meet their immediate requirements, and there is a hesitancy to commit to larger purchases.

“We have seen the standard enquiries but buyers taking less volume,” said one European trader. “No convertors are interested in building stock at the end of the year.”

There is also talk of some aggressively priced imports coming into Europe from markets such as Mexico, Egypt, Pakistan and Iran. However, the volumes involved were uncertain, and European players have requirements for constant spec quality that import cargo may not meet.

Other players believed that the downward movement on European styrene had helped close the recent arbitrage window from other regions into Europe.

“July, August and September were very difficult,” said one PS producer on the sidelines of the 49th annual European Petrochemical Association (EPCA) meeting earlier this week in Berlin. “Demand was not great because of the high styrene costs, and the spread between Europe and Asia was too high.”

Downstream in the expandable PS (EPS) market, several players expressed some frustration with the current outlook for PS pricing and the impact this will have throughout the chain.

One EPS supplier said: “We will try and limit our October reductions more in line with PS than the styrene drop, but given the year we have seen in terms of styrene pricing, there is a strong appetite from customers for lower numbers this month.”