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European PS markets on hold ahead of Sept styrene contract

by Merve Madakbaşı -
  • 30/08/2019 (08:15)
Players in the region have wrapped up their August PS business with increases of €10-30/ton after initial hike requests were trimmed. Now, attention has turned to the imminent outcome of September styrene contracts for the future direction of downstream PS prices.

Summer holidays restricted purchasing volumes during August

Several producers and distributors affirmed that activity was tepid over August mainly due to long summer season. Converters left the market for two weeks, at least, before they started to return to their desks this week. “Our sales volumes were quite limited,” lamented a West European PS maker.

Another regional seller reported concluding only a few deals with €30/ton hikes, attributing this to the holiday mood that dominated the market during the recent few weeks. Some buyers managed to meet their limited requirements with rollovers for South European PS cargos, in the meantime.

Expectations for styrene built on higher spot prices, offline crackers

Forecasts for the outcome of new styrene contracts mostly call for slight increases. PS sellers hope to receive support from firmer benzene and styrene spot markets next month after failing to achieve their initial hike goals for August.

Spot styrene prices on an FOB NWE basis have gained around $30/ton since the beginning of August. This was mostly on the heels of the rising benzene market , where spot prices have spiked by almost $100/ton on CIF NWE basis in the same period driven by availability constraints.

Another factor to propel the upcoming styrene settlement higher is the cracker shutdowns that have been in place in Europe as they would lead to reduced ethylene supply. Shell, INEOS, BASF, ExxonMobil and BP have been among the major companies to conduct cracker maintenance for different periods of time since July to date. The combined capacity of these crackers reaches 3.3 million tons/year, approximately.

Although September butadiene contracts settled down by €20/ton last week, suppliers are counting on firm expectations for styrene’s outcome.

Blurry demand outlook, 2-year-low naphtha may limit hike goals

Although players are aware of possible increase intentions on the side of PS sellers particularly if firm styrene expectations materialize, some of them are pointing to the unclear state of demand in September .

A PS distributor in Belgium marked, “Our initial hikes of €45-50/ton have not passed due to depressed demand amid holiday. Styrene may settle slightly higher given supply concerns regarding ethylene. Still, we are not that optimistic about the outlook, taking weak naphtha and volatile crude oil prices in Europe into account.”

A food packager in Italy opined, “Generally lower consumption, contracting auto industry and global economic woes kept PS activity mild along with holidays. Plus, sufficient stock levels on the part of buyers may be mirrored in PS activity next month.”
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