LONDON (ICIS)--European styrene spot numbers for July have jumped more than $100/tonne so far this week amid rising concerns over some possible production issues in the region, sources said on Friday.
A producer was said to be having some sort of an outage but was unavailable to either confirm or give any clarification on the situation.
According to market sources, it is a “temporary situation” and not an important issue.
The beginning of the week saw July spot numbers around $1,100-1,140/tonne. However, around mid-week, bids and offers had jumped to $1,160-1,300/tonne on the back of the supply concerns.
As the July barge contract price settlement approaches, players said that its outcome is now rather uncertain.
“If you would have asked me on Tuesday afternoon, I would say that a decrease of €30-40/tonne would be possible, given where spot numbers were; however, since then, things are looking the other way around,” a buyer said.
This source added that the level of the spot market by Friday will largely define Monday’s outcome.
“If spot hovers around the $1,200/tonne area, then we might see an increase of €30/tonne but everything is possible now,” the source said.
Another player said that these apparent production issues will probably have an influence on the contract price result but should not impact it that much.
“I still believe that a decrease of €20/tonne or a rollover are possible; anything different would be difficult for players in the downstream styrenics markets to handle,” it added.
A source in the distribution market said that the barge market is the first to react in production problems.
"For truck business, most customers are covered by contracts, spot business is relatively poor and, therefore, does not react simultaneously, it added".
Players in the upstream benzene market were concerned that these potential production limitations would have an impact on their demand, although volumes from the other derivative markets such as the phenol chain and the methyl di-p-phenylene isocyanate (MDI) industry were considered healthy.
Meanwhile, around 25,000-40,000 tonnes of imports are expected around the first days of July, mainly from the US but also some volume from the Middle East.
In terms of demand, things are still looking stable as this is the market’s high season and volumes are definitely better compared to the first 4-5 months of the year, sources said.