ARA styrene well supplied despite turnaround season

Author: Truong Mellor


LONDON (ICIS)--The European styrene spot market continues to maintain a healthy spread with upstream benzene, although the raft of imports into the ARA (Amsterdam-Rotterdam-Antwerp) region, along with relatively underwhelming offtake, is driving some downward pressure on pricing, sources said on Thursday.

April styrene spot values are at $1,605-1,630/tonne (€1,252-1,271/tonne) FOB (free on board) Rotterdam this afternoon, trading twice midweek at $1,625/tonne. Meanwhile, benzene has been hovering around the $1,250/tonne CIF (cost, insurance, freight) ARA mark throughout the week, with the market stabilising after reaching a floor around $1,220/tonne towards the end of March.

Sources agree that any impact on styrene pricing from the turnaround season has so far been minimal, with poor demand from key end-use sectors – such as construction – keeping any price spikes or availability issues from emerging.

However, the continued arrival of US imports into Europe this month has made storage a key concern among players, with the possibility that cargo will have to be cleared from tanks to make way for new material.

“The arbitrage from the US into Europe was attractive at one point,” explained a trader. “But now you’ve got tanks overflowing.”

Because of this, several buyers are anticipating some distressed sales as players look to clear inventory, although spot levels have maintained a certain robustness despite soft demand.

“The distribution market is very quiet,” said one consumer. “People are covered by contractual volumes. There are no distributors looking for trucks, or end-users really looking for material."

Regarding the current spate of turnarounds, one supplier was said to have begun a six-week turnaround earlier this week, while another plant is scheduled to come off line in mid-April, although there was no confirmation from the producer.

Another major producer was said by sources to have gone into turnaround for six weeks in early to mid-March, and is therefore likely to be in the process of coming back on line, although this was not confirmed by the company.

Even with an improvement in styrene demand, current inventory levels are likely to cover any increased offtake in April.

“With the imports coming in, getting hold of material really isn’t an issue,” said one source.

As a result, several players expect this month to stay relatively flat in terms of pricing, with some adding that there is still room for styrene values to move down, given the current spread with benzene and naphtha.

Other players countered this, with an expectation that the market could see some upward movement both on pricing and demand once construction activity picks up and the turnarounds have more of an impact.

The April Europe styrene barge contract was agreed earlier this week at €1,411/tonne FOB ARA, down by €64/tonne from the previous month in line with feedstock cost reductions.

“Full raw materials [decrease] is a larger drop than I was expecting to be honest, given the outages on styrene,” one consumer said.

($1 = €0.78)