US March styrene contracts plummet amid demand erosion, plunging upstream benzene

HOUSTON (ICIS)–US March styrene contracts were assessed at a significant decrease on Friday, falling by 15 cents/lb ($330/tonne), amid demand destruction from efforts to stop the spread of the coronavirus and plunging upstream benzene costs.

Styrene contracts are assessed one month in arrears.

The 30% decrease in the contact price is the sharpest one-month drop by percentage since contract prices fell by more than 43% from November 2008 to December 2008, according to ICIS pricing data.

The market has been weighed by persistently soft derivative demand, but the recent downward trend has been amplified by sharp decreases in crude oil prices, spurred by a price war between OPEC and Russia.

The sharp drop in crude prices has also been driven by the sudden demand destruction as much of the country has shut down except for essential services amid the coronavirus outbreak.

Spot benzene prices dropped in March as the pandemic continued to push down global crude values. April benzene contracts fell by more than 50%, which also pressured styrene values.

Derivative demand has been hurt further after most auto production in North America stopped around 19 March after Ford Motor, General Motors (GM) and Fiat Chrysler Automobiles (FCA) – the US Big Three – announced a pause at least through the end of the month after an employee at a GM facility in Warren, Michigan, tested positive for the coronavirus.

Ford announced plans to restart production on a limited basis beginning 6 April, but scrapped that plan amid increased concern for worker safety.

Derivatives acrylonitrile-butadiene-styrene (ABS) and styrene-butadiene-rubber (SBR) have significant uses in the automotive sector.

Spot export prices were assessed at a decrease. Amid a lack of liquidity, the assessment was on a notional basis using netbacks to Europe.

Spot transactions during the week were heard to have been done on a benzene-plus basis to avoid market risk.

Styrene is a chemical used to make latex and polystyrene resins, which in turn are used to make plastic packaging, disposable cups and insulation.

North American styrene producers include AmSty, INEOS Styrolution, LyondellBasell Chemical, Pemex, Shell Chemicals Canada, Total Petrochemicals and Westlake Styrene.

Focus story by Adam Yanelli

Visit the ICIS coronavirus topic page for analysis of the impact on chemical markets and links to latest news.

Thumbnail: Styrene is used to make polystyrene (PS) and acrylonitrile butadiene styrene (ABS). (Photo by Al Greenwood)