Europe styrene spot reaches pre-pandemic levels on Asia demand, short US supply

LONDON (ICIS)–Europe styrene daily spot prices have surged by nearly 30% in the past two weeks, reaching pre-pandemic levels and 2020 highs as fundamentals remain firm.

At the beginning of October, spot prices were at $600/tonne, but less than six weeks later prices averaged $900/tonne on Tuesday as bids stood at $850/tonne and offers spiked to $950/tonne.

There is a lack of styrene spot in Europe due to healthy export demand to Asia and reduced imports from the US because of hurricanes in the Gulf Coast.

Also, there is a delayed restart at a producer undergoing planned maintenance, while another is still in a turnaround as planned.

Firmer crude oil prices and a more positive demand outlook following news of a highly effective Covid-19 vaccine by Pfizer are also reasons contributing to the upswing in recent days.

News of the vaccine has the potential to be a game changer for the global economy, offering hope for a sustained broad-based recovery and the potential for an end to the pandemic as soon as 2021.

Average prices last stood at around $900/tonne in January; the World Health Organization (WHO) declared coronavirus a global pandemic on 11 March.

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ROLLER COASTER YEAR
Prices had started to gradually ease off after 21 January as Asia demand was slowing as the outbreak first hit China.

The level at $900/tonne in January – and this week – is the highest average price for styrene in 2020.

Prices began their rapid decrease in February as the impact of the pandemic spread to Europe.

European styrene spot prices posted in March some of the steepest daily price decreases recorded as pandemic-related lockdowns in Europe dented demand and sentiment.

Prices bottomed in late March, and made a slow recovery until the end of July.

Prices were then under downwards pressure until early October, when they started to rise again on the back of higher prices in Asia.

The region’s manufacturing sectors have had healthy activity in past weeks; China demand surged following the National Day Golden Week holiday.

With Asian prices on the rise, global prices have continued to firm in a tight market.

On Tuesday, Europe styrene prices for December stood at $830-885/tonne FOB (free on board) Rotterdam.

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

Front page picture: Tourists in Xi’an city, northwest China, during the National Day on 7 October; manufacturing returned to healthy activity post-holiday
Picture source: Shutterstock 

Focus article by Helena Strathearn