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Styrene remains on upswing on crude, curtailed supply across board

by Merve Madakbaşı - mmadakbasi@chemorbis.com
  • 10/04/2024 (11:14)
Global styrene markets have been marching higher in Europe, Asia and the US, as rallying crude oil futures and production hiccups fueled relentless hikes starting in mid-March. Supply chain issues driven by the Red Sea crisis added to the bullish scene, with players feeling edgy about the widening price gap between Europe and Asia.

Styrene Prices – FOB Korea – FOB NWE

Main culprit behind the bulls: Global supply crunch

Industry players pointed to the lingering shutdowns at several styrene plants across the board as the key reason behind the ongoing upward trend. Planned or unexpected issues curtailed supply levels further, on top of logistic mishaps that have hit supply chains and led to elevated shipping costs since late 2023 amid rising geopolitical tensions.

According to ChemOrbis Production News Pro, slightly more than 1.5 million tons of styrene capacity were removed from global markets in March, with the largest loss coming from China (430.000 tons). It was followed by Saudi Arabia (163.000 tons) and the US (104.000 tons). As per available data at the time of press, the total capacity loss was expected to be at 875,000 tons in April.

European styrene hits fresh high as Brent holds above $90/bbl

Prices in Europe have been on an upward march since December last year when the Middle East unrest first hit the logistic industry. Except for a short period of downward corrections in March, spot styrene prices have sustained their rally in the region.

Styrene skyrocketed by $150/ton from late March to be reported by traders at $1750/ton FOB NWE in the first week of April before touching as high as $1790/ton on Monday. Bullish Brent crude oil futures, which held above the $90/bbl threshold early this week on a tighter supply outlook, pushed spot prices to their highest levels since July 2022, not to mention the support from firmer benzene prices.

Surging benzene prices underpin styrene in Asia, the US

In Asia, jumping crude oil futures and higher benzene prices kept the market strong in the first week of April. Spot benzene prices extended their gains into this week, with prices for H2 April shipments nearing the $1100/ton CFR China threshold owing to short covering. Following suit, on Tuesday, spot styrene prices touched $1180/ton with the same terms.

Similarly, rising crude oil futures and tight supply in the US pushed spot prices to their highest levels since mid-July 2022, as per ChemOrbis data. Industry sources claimed that a styrene unit was under force majeure, although this was not confirmed by primary sources at the time of writing. Adding to the scene were increasing spot benzene prices, Resin Technology Incorporated (RTI) said.

Markets feel edgy as Europe-Asia delta nears $650

The SM uptrend opened the Asia-to-Europe arbitrage window in January, with the premium of spot styrene prices in Europe reaching $640/ton recently. This figure pointed to the highest gap since June 2022, ChemOrbis Price Wizard suggested. Besides, the Europe-US gap reached its highest level since August 2023, as the bloc traded $275/ton above the FOB USG-based market.

Meanwhile, elevated styrene prices in Europe caused jitters among market players about a sharp downturn for the coming term. Despite the arbitrage window remaining wide open throughout the first quarter of 2024, the ongoing shipping issues seem to have curbed a potential material flow from the US Gulf and Asia into Europe. Moreover, plant issues across the board seem to have prevented an influx from overseas.

Looking ahead, prices in Europe may not retreat much so long as the energy complex remains close to the current highs. Players will monitor the timing of plant restarts across the board as Q2 wears on.
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