Recent drop in Europe styrene spot may be start of cooling down phase

Focus article by Vasiliki Parapouli

LONDON (ICIS)–After five consecutive increases of the barge contract from November 2016 to the current month, the European styrene market witnessed spot prices softening this week in tandem with some losses in the Asian market, players said on Friday.

The market had experienced a similar scenario in 2015 when there was an increase of the barge contract in December and then an astronomical hike in February.

However, for many players, mainly in the downstream styrenics market, the biggest problem is that prices never go down as quickly as they go up.

Some sources had already expressed expectations for lower spot values since last week but were a bit surprised that it happened quite so soon.

“I was expecting Europe spot prices to drop but, even for me, the decrease came a bit faster than I thought. Benzene is also moving lower and I think there is room for further styrene decreases,” a buyer said.

By Thursday afternoon, the March bid/offer range of European styrene spot prices was seen at $1,410-1,470/tonne.

“It would not shock me if it goes even lower by Friday, “ the source added.

Most players are in a “wait-and-see” position and buying interest is not there for the time being, sources said.

“This could be the beginning of the cooling down phase; the market might be getting longer and maybe is looking for a new floor,” one of them said.

After the February contract price settlement, spot prices spiked from $1,440/tonne to $1,530/tonne and then further up to $1,600.

“Spot prices at the beginning of March, in euro terms, are the highest they have ever been,” another styrene buyer said.

Nevertheless, other players believe that the drop in spot values is something temporary and the market will soon go up again.

“There are major turnarounds coming up in Asia and they will most likely have an impact on the global styrene market,” a PS producer said.

“The US market is dry as a bone; even if the styrene barge contract drops next month, we expect prices to remain around current levels for the next two or three months,” he added.