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Europe styrene off to a sluggish start in 2012 amid weak demand

January 13/2012

(ICIS) -- The European styrene market has seen a slow start to the year so far as lacklustre demand from key derivative sectors and some ongoing length is keeping activity muted and prices stagnant, sources said on Thursday.

While benzene prices are gradually creeping up on good demand and upward pressure from crude oil due to supply concerns in light of the tensions in both Iran and Nigeria, slow demand for styrene and polystyrene is keeping the market uninspiring, according to one source.

January styrene deals were at USD 1,280-1,295/tonne (EUR 1,011-1,024/tonne) FOB (free on board) Rotterdam last week, and bids and offers this week have for the most part stayed within this range. If benzene keeps pushing, the February styrene contract will have to jump up a fair bit or else [operating] rates will have to be cut, said one player.

The January styrene barge contract was confirmed at EUR1,214/tonne on an ex-works basis last week, up EUR120/tonne from the previous month in line with higher raw material costs.

There is also good availability for January styrene in Europe, which is keeping any price rises at bay. There is some length in the market now that all the plants are running, explained one trader. Another source said that when the market is long, this has a negative impact on overall liquidity.

However, a robust Asian market is keeping prices from falling significantly. February numbers in the region are currently at USD 1,370-1,390/tonne FOB Korea.

With the arbitrage window to Asia open, any further price drops would lead to material being shipped out of Europe. As a result, January prices have hovered just below the USD1,300/tonne mark since last week.

Despite the slow start to 2012, other players remain upbeat. I think were are going to see a nice contango into March, said one trader.

Tags:PS, styrene.
Category:General News
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