Europe spot styrene at record highs ahead of Sept
Truong Mellor
28-Aug-2013
LONDON
(ICIS)–Prompt tightness has pushed European styrene spot
prices up to record highs this week ahead of September barge
contract negotiations, sources said on Wednesday.
The upturn began last week with a midweek rallying for
August, as bids reached $1,740/tonne (€1,305/tonne). August
deals were confirmed last week at $1,730/tonne and
$1,740/tonne.
Several traders had noted that September could see renewed
bullishness on pricing amid at least one production outage
and better demand from downstream markets following
the holiday season.
By the end of last week, however, the upturn was far more
pronounced. A deal for September was done at $1,820/tonne,
and this pushed bids for August and September
as high as $1,840/tonne, although no further business was
confirmed by the close of business on Friday August 23.
“People have to have the product on 1 September, and
today is the last day they can buy because of the nomination
period,” explained one source on Friday.
The upcoming lock strike in Germany has
also seen several players push delivery forward in a tight
market, which has added further upward pressure on
pricing.
This week opened with continued
bullishness for prompt material following a prompt intertrade
August deal done at $1,870/tonne.
While spot numbers for September had
started to show signs of a decrease earlier this week, with
some backwardation for the second half of the month also
emerging, by the close of business on 27 August several
traders saw September bids back up at $1,840/tonne amid
continued supply constraints.
All of which is likely to weigh heavily on
the upcoming September barge contract price talks.
While some minor upward movement is
expected for feedstock benzene next month, the benzene/styrene
spread has remained ample for several months already.
The crucial issue will be the state of the
styrenics derivative markets, according to numerous
players.
While some improvements in demand are expected for September,
with industry returning en masse following the summer holiday
period, any further price increases could have a serious
adverse effect on offtake.
“Some downstream players have CP [contract price]-related
pricing for sales, but they are still 50% exposed to the spot
market,” said one industry source. “That will be tough this
September.”
($1 = €0.75)
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