Europe styrene spot softer on weak Asian sentiment, improving supply

LONDON (ICIS)–European styrene spot prices have fallen further this week despite expectations that values would be firming following the Golden Week holiday in China, sources said on Friday.

Initially, it was believed that once the Chinese market would be back from holidays, purchasing activity would be booming, pushing prices up both in Asia and in Europe.

However, the opposite happened, as China’s domestic styrene monomer (SM) prices slumped on poor buying interest and amid a build-up in inventory after the week-long holiday.

According to latest ICIS data, commercial inventories of styrene along eastern China jumped to its highest level since June following Golden Week.

Total stocks of SM stood at 86,200 tonnes, up 29,200 tonnes, or 51%, from two weeks ago.

Stockpiles were last higher on 23 June, when they were reported at 99,600 tonnes.

Asian prices rebounded towards the end of the week. However, market sentiment was still weak.

Consequently, European players said domestic prices had eased, although they added they found it very difficult to read how the market could be moving forward in coming weeks.

Some of them believe that European prices could be hovering around current levels until the end of October.

Meanwhile, others said that, even if Chinese prices have recently gone down, they could go up overnight and have an immediate impact on Europe.

At the beginning of September, prices climbed higher due to Hurricane Harvey but the market looks now more balanced and should remain this way until the year’s end, according to estimates.

European fundamentals seem stable with robust demand, improved supply and production running well, apart from one on-going planned maintenance shutdown that is nearing completion.

For years, the market’s main concern had been demand. However, since the outlook for demand looks now positive, there should be no other major concern except for unplanned production issues from which the European styrene industry has suffered quite a lot lately.

The downstream European expandable polystyrene (EPS) market remains the leading performer with robust demand going into November, while buyers have already placed December as well as January orders.

Demand in the European polystyrene (PS) market is also improving but it is not as strong, while volumes in distribution remain weak.

The PS market was affected by the feedstock spike in September but also from the logistics issues caused by the rail problems in the German Rhine Valley route.

On the import side, after the arrival of the final shipments from the US, no exceptional volumes should be expected for the rest of the month while this year the European market has seen less imports in general, a producer pointed out.

Given the volatility of styrene prices globally, it is hard for anyone to take the risk and commit to a vessel whose price upon arrival in Europe might be totally different to the one initially expected.

Regarding the ongoing anti-dumping investigations for styrene volumes originating from South Korea, Taiwan and the US to China, European players preferred not to make any further speculation about it until an official statement from the Chinese government is made, possibly in the course of 2018.

Focus article by Vasiliki Parapouli

Pictured above: EPS insulation being fitted to houses in the UK
Source: Graham Harries/REX/Shutterstock