Price and market trends: US styrene expected to be tight in 2014

10 January 2014 09:47 Source:ICIS Chemical Business

Market participants expect more contracts being tied to market conditions rather than raw material costs

US styrene trade participants expect 2014 to see supply remain tight alongside moderate growth in some consumer areas. In addition, some suppliers expect to see more of a disconnect between the styrene market and feedstock benzene costs. These market expectations are somewhat different from a year earlier, when styrene trade participants did not expect to see much improvement in 2013 market conditions, citing continued weak domestic and overseas demand.

But for much of 2013, styrene supply was tight because of production issues, not just in North America but globally. For 2014, tight market conditions are expected to linger – not just in North America but globally, sources said.

Two North American suppliers are having production issues.

Shell remains on force majeure on styrene out of its facility in Alberta, Canada, since late November, while Styrolution’s Texas City, Texas, US facility remains on a 65-day shutdown, which began in November. There has been no word on when Shell will come off its force majeure. Styrolution’s Texas City facility is expected to be back online by mid-January.

The tight market in the first quarter will likely keep upward pressure on styrene spot prices, in addition to some market growth alongside global GDP growth.

But trade sources noted that they expect to see styrene demand growth from the unsaturated polyester resins (UPR) industry, especially out of Latin America. “[UPR] had the strongest growth rate this year,” said a US styrene supplier.

In November 2013, trade sources at the Latin American Petrochemical Association (APLA) annual meeting said that UPR demand out of South America was surging, as the region expects economic growth in 2014.

Suppliers and consumers were also in agreement that the styrene industry may see more of a disconnect between feedstock costs, as the industry will be more tied to market conditions. US styrene market participants added they expect more contracts being tied to market conditions rather than raw material costs. “It’s already happening,” said one producer.

By Brian Balboa