LONDON (ICIS)--Players in the European expandable polystyrene (EPS) market have agreed early May contracts at a reduction of €40/tonne, in line with the monthly feedstock barge contract drop, sources said on Thursday.
A few producers started their negotiations by targeting prices €20-30/tonne lower than April, and there have been a few cases where customers accepted reductions close to the high end of this range.
Still, until now, it appears that the majority of suppliers have been offering the full May monomer drop, given that the styrene spot market is looking backwardated going into June.
The moderate drop of the May styrene barge contract did not come as a surprise for domestic EPS players, although at the end of April some of them had been forecasting a larger correction.
Looking at latest indications, feedstock spot values could be moving lower from the second half of the month onwards and this might suggest that the June barge contract could post another decrease.
Based on that, although demand in May has a better flow than in April, customers continue to purchase limited stock, and only replenish the material that they had not bought during the past couple of months when prices were still high.
Demand in April probably went close to its lowest point for some, but it seems that May might end up to be better year on year, although it will most likely not end up to be an exceptional increase.
Still, despite the increased order entry, a part of the market thinks that volumes are lower than expected and hopes for a better performance June, if prices are to soften a bit more as well.
There are several public holidays across Europe during May and this will inevitably have some sort of an impact on demand since working days are reduced.
As weather conditions in the region improve, though, consumption from the insulation side should be higher in June, while volumes from the packaging sector will possibly remain flat.
On the availability side, there were no issues with raw material availability or any problems across the supply chain.
Some sources mentioned that standard grade EPS might have been a bit tight, but this could not be confirmed from the wider market.
Pictured: EPS insulation being fitted into a house in the UK. Market players expect demand from the insulation industry to increase in June Source: Graham Harries/REX/Shutterstock