As October approaches, Europe styrene sentiment remains weak, as prevailing macroeconomic uncertainty reduces confidence in a well-supplied market.
Supply is ample, despite a suspected ongoing outage and two lengthy turnarounds under way.
In the coming weeks, market players will be closely monitoring developments in the upstream benzene and crude sectors, as well as assessing any impact following the recent oil refinery attacks in Saudi Arabia.
The market has been one of thin liquidity for many weeks now, and the relatively stable styrene pricing during late September - in the face of planned outages and after the attacks on the Saudi petrochemicals complex - suggests limited pull from downstream sectors.
This could be supported when looking at the current weakness of polystyrene (PS), expandable polystyrene (EPS) and acrylonitrile-butadiene-styrene (ABS).
Spreads with benzene slipped to their weakest level for at least a year.
The spread between the two products provides a gauge to the profitability of styrene production, with a wider spread suggesting healthier margins for producers and a narrower spread indicating compressed margins.
Europe’s benzene prices for prompt delivery fell in week 39 amid lengthening supply from expected imports. The backwardation is shrinking as the market shakes off production hiccups.
The supply outlook for autumn appears ample despite the planned maintenance at Ellba’s 550,000 tonne/year Moerdijk facility and the LyondellBasell/Covestro turnaround at the 680,000 tonne/year Maasvlakte site, both in the Netherlands.
These were scheduled for around 22 September until 6 November and from mid-September until mid-November respectively. Neither outage has been confirmed by the producers.
In addition to these being well planned for, and demand being on the soft side, imports are scheduled to enter Europe in autumn to cover the lost volume amid the turnarounds. Around 70,000 tonnes are due in from the US and the Middle East.
Trading was thin last week, with a wait-and-see attitude pervading the market. September bids and offers were limited, and truck values were assessed stable.
In the key derivative PS market, players are awaiting the conclusion of the styrene barge contract for October before negotiating prices for next month. Demand for September has been largely flat for the time of year while supply has been ample for most grades, despite ongoing production issues.
EPS demand picked up compared with the first half of September but supply remained long with imports from Iran continuing to arrive into the market and demand broadly flat for the time of year.
The October styrene barge contract price is expected to emerge on 1 October.
Styrene is a chemical used to make latex and PS resins, which in turn are used to make plastic packaging, disposable cups and insulation. - Source: ICIS-