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Are clouds hanging over bullish expectations for European PS market?

  • 19/09/2017 (04:21)
European PS suppliers approached the market with massive increases of €200-210/ton following the monthly styrene contracts. Along with the steep increases, spot PS prices have reached 5 month-high in Italy, the data from ChemOrbis Price Wizard reveal.

Although market participants were shocked by these hikes and buyers mostly refrained from sourcing beyond their needs, increases of €190-200/ton were reflected on deals given tight supplies.

Not only costs, but also logistics problems also supported the upturn in September. European players faced logistical challenges due to a railway closure in South Germany. As a result of the disrupted railway traffic from Germany to Italy and Switzerland, INEOS Styrolution declared force majeure on ABS and PS deliveries to both countries. The railway line is slated to be re-opened by October 7.

A distributor from Italy noted, “We had to switch to trucks instead of rail transportation, costs of which rose following the railway closure in Germany. Hence, we should apply increases of €250/ton as deliveries via truck are more expensive.”

Expectations are now voiced regarding the future outlook as some players expect current trend to be sustained in October. However, volatile styrene prices have cast a shadow on these bullish expectations recently as spot styrene prices posted three digit decreases throughout September before rebounding somewhat in the latter part of last week. Players are now wondering if spot PS prices will be prone to decreases in October in the midst of volatile spot styrene prices.

Some players, who built some safety stocks in the previous months to avoid September hikes, are taking a cautious approach amid talks of a possible correction in downstream PS market. A buyer reported to have purchased only 50% of his usual quotas. A source from a major producer also opined, “PS prices may erase their current gains in October, moving back down to August levels.”

Moreover, attractive import offers started to emerge in Italy’s PS market. Competitive GPPS offers from Russia stand €135/ton below the low end of the local range while HIPS offers for the same origin are €165/ton lower compared to the other European origins.

A buyer opted for sourcing Indian GPPS from the import market, which is €110-120/ton lower compared to the low end of the spot market for European origins. The buyer also paid €130/ton lower prices for Indian HIPS.
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