Europe styrene firms on strong benzene, Q1 supply concerns

LONDON (ICIS)–The European styrene spot market remained under upward pressure this week as upstream benzene values in the region rose further on the back of ongoing tightness in the US, despite expectations that supply would start improving as November wraps up, players said on Friday.

Most styrene players are focused on December material as well as volumes for the first quarter of 2018, while interest for November was limited, although a few trades did happen this week.

A spike in benzene spot prices around mid-week and particularly on Friday morning took styrene values higher as well despite that market fundamentals remain stable with good demand for this time of the year and no supply restrictions.

Some players were surprised about the upward push coming out of benzene, as even if it is the sole driver for styrene pricing at the moment, the high season for demand is coming to an end.

The pressure felt is probably more psychological and mostly relates to extensive discussions about styrene availability in the first quarter of next year, with a series of planned maintenance shutdowns expected in Europe and the US.

The unclear supply status of the market during that period creates a lot of concern as well as plenty of speculation which makes the industry very hard to read.

Several players do not question that from February onwards styrene availability will probably not be ample, but, at the same time, it will be a stage of lesser consumption with snow and cold weather across several countries in the region.

Based on the different scenarios circulating, players have already starting planning their needs well in advance with even some February trades heard in the market.

Commenting on that, some sources said that such purchases do not really make sense since it is material that has not been produced yet, but it is already sold on a higher price, which is only assessed by vague scenarios.

The past couple of weeks have shown that the European styrene market is doing circles with a couple of days of firmer pricing and other days of lower values totally depended on benzene and Q1 speculation as players are trying to identify the right strategy.

According to estimates, the market could stay like this for another two to three weeks, which leads to the assumption that the December contract price settlement, expected late next week, could record an increase of around €60-90/tonne, based on current spot indications.

Others were even talking about a triple-digit increase based on feedstock benzene’s sharp increase at the end of the week.

Although the weather has started getting colder, the classic seasonal slowdown in demand is not that evident yet in the expandable polystyrene (EPS) market looking at next month’s nominations, while supply issues in the polyurethane and mineral wool markets continue to enhance EPS volumes.

In the distribution market, players witnessed some export demand for Africa last week, while customers are already looking for December material and some of them are getting nervous about supply in the next months.

Prices were higher this week following the upward trend of the bulk market and were quoted at €1,080-1,100/tonne on a FCA (free carrier) basis.

Pictured: Mineral wool-based figures. Mineral wool is one of EPS’ end markets
Source: WestEnd61/REX/Shutterstock

Focus article by Vasiliki Parapouli