Upwards cost pressure draws firm March outlook for European PS
The €260/ton higher styrene and €460/ton higher butadiene settlements for February led to three digit increases on downstream PS prices this month. Sellers achieved the full styrene hike on their PS deals with most transactions indicating €250-260/ton increases so far. Consequently, Italy’s local PS market is now standing at the highest levels since June 2015, according to the weekly average data on ChemOrbis Price Index.
In upstream markets, spot styrene prices on FOB NWE basis hit a 27 month-high, according to ChemOrbis Price Wizard, to stand slightly above $1650/ton recently. Supply for the monomer is still considered tight across Europe amidst active demand from the US where players are experiencing a lack of availability.
Spot butadiene prices held stable since February started while they recorded a cumulative increase of $500/ton compared to a month ago to stand as high as $2500/ton with the same terms. According to market sources, butadiene supplies in Europe are not expected to ease any time soon taking the cracker turnarounds in March into account.
A distributor in Italy attributed the remarkable hikes in February to soaring monomer costs as well as the rising Asian PS markets. “Next month hints at some further PS increases in Europe as surging styrene prices throughout February will exert an upwards pressure on sellers. However, relatively moderate hikes may emerge this time if demand cools down,” he opined. The seller further commented that supply for GPPS is comfortable while HIPS was tight due to an output disruption at a West European producer. Another trader predicts seeing hikes of up to €100/ton for styrene and PS in March blaming tight styrene supply and availability issues for PS in the region.
A packager similarly predicted hearing new hikes based on costs. “We will try to limit our purchases to a needs-basis after paying large hikes this month. Meanwhile, PS supply is shorter and some suppliers are delaying their deliveries,” he reported. Deliveries are delayed especially for HIPS nowadays, according to another converter.
Meanwhile, some manufacturers are mulling over cutting their production rates at their factories depending on end product demand. “PS sellers have been seeking strong increases during the last three to four months, which exceeded the increases in other polymer markets. We are purchasing from hand to mouth as our end customers are hardly accepting rising product prices. We may even consider turning to alternative products and reduce our PS consumption,” a buyer lamented.
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