Europe styrene market poised for sharp drop in July contract
Truong Mellor
29-Jun-2016
(adds latest prices in 6th paragraph)
LONDON (ICIS)–Falling styrene spot prices over the course of June is likely to support a sharp decrease on the upcoming July contract settlement, sources said on Wednesday.
Following a delayed restart after a period of planned
maintenance shutdowns over May, spot numbers spiked above $1,200/tonne FOB
(free on board) towards the end of the month which saw the
July barge settlement agreed at an increase of
€60/tonne.
The increase shocked many derivative players, who saw
the bullishness at the time as a brief squeeze on prompt
availability that was not representative of overall market
fundamentals.
As a result, downstream players have been
said to be holding back on purchases in June, as next month
is expected to see considerably lower styrene costs.
There was a subsequent drop in spot pricing as June unfolded. Current spot indications around the $1,000/tonne FOB level would support a triple-digit decrease for the July barge settlement.
Offers for July spot material edged down slightly to $1,010/tonne today, while bids were steady at $980/tonne in a quiet market.
However, one styrene trader said that it was seeing reasonable demand in the distribution sector.
“The euro is helping, but some uncertainty about the July contract is holding folks back,” the trader explained.
With benzene numbers holding relatively steady around
the June contract price level this week, the benzene/styrene
spread remained structurally high despite the improved
availability for styrene emerging as US imports arrive.
“Benzene is not a factor, it is that
simple,” the trader added. “If this was a spread-based market
we would be at $850/tonne. Demand seems actually quite good
here, and Asian numbers make sure we can’t go down.”
Asian spot numbers edged back above $1,000/tonne FOB
Korea this week ahead of the Q3 manufacturing season on the
back of tightened availability in China.
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