Europe styrene market facing downward pressure ahead of October

27 September 2016 16:25 Source:ICIS News

(adds pricing detail in penultimate paragraph)

LONDON (ICIS)--Lower raw material costs and a sluggish spot market are both weighing down on the European styrene market ahead of the October barge settlement expected later this week, sources said on Tuesday.

October benzene traded at $670/tonne on Monday 26 September, and a reduction is expected for the upcoming monthly settlement following a September contract agreed at $700/tonne. A weaker US dollar compared to a month ago would also support a larger downward movement in euro terms.

“Benzene is usually firmer at this time in the month,” said one styrenics producer this morning.

There are mixed opinions about where ethylene will settle for October, with higher naphtha costs counterbalanced by some expected supply improvement next month as cracker output improves.

With a reduction of €20-25/tonne anticipated based on feedstock costs next month, some styrene players are expecting the October barge settlement to move below €1,000/tonne FOB (free on board) ARA (Amsterdam-Rotterdam-Antwerp) for the first time since February 2016.

October spot material traded several times on 26 September at $950/tonne FOB, and with Asian numbers also easing during this month, several sources felt there could be continued downward pressure on the market in October.

Offers for October were at $950/tonne FOB earlier today, with bids at $930/tonne. The market was otherwise quiet.

European styrene spot numbers dropped below $1,000/tonne in early August 2016 and have remained below this level due to ample regional availability. Some players felt that derivative demand has been healthy over August and September, but the downward pressure on the market has been due to the additional supply stemming from imports and healthy production output in Europe.

By Truong Mellor