The Northwest European styrene monomer premium to feedstock benzene surged 14% or $54.50 day on day to $464.50/mt Tuesday as diverging market fundamentals pushed the two products’ spot prices in different directions.
NWE styrene barges loading 5-30 days forward were assessed at $1,273.50/mt FOB ARA Tuesday, a rise of $19 day on day due to expectations of tighter supply.
Market participants attributed this to Trinseo’s maintenance at its styrene unit in Bohlen, Germany, which will be taken offline at the end of August for a scheduled turnaround lasting throughout September, the company said earlier in the week.
The Bohlen facility has a nameplate styrene capacity of 300,000 mt/year, representing approximately 5% of total capacity in Europe, according to Platts data.
Meanwhile, benzene barges were assessed at $809/mt CIF ARA, down $35.50, because of a combination of ample supply and lower demand causing a fall in prices since the beginning of the third quarter.
Using feedstock ratios of 0.79 for benzene in the styrene production process, Trinseo’s maintenance would decrease benzene demand by approximately 20,000 mt during September.
Combined with favorable benzene extraction economics during July, the NWE region has an overhang this month, adding to the bearishness in the benzene market, industry sources said.
This comes after the average NWE benzene premium to feedstock naphtha for July rose 23%, or $66/mt, month on month to $374/mt, Platts data showed.
Benzene’s premium, a measure of production margins, has so far averaged $391/mt this month, 5% or $17/mt above the July average.
“Benzene is coming under pressure, the cracker outages in June are coming back and the hype on benzene over the short and long term is over. It’s likely that styrene outages will offset any [styrene price] falls,” a consumer source said.
Since the beginning of Q3, Shell’s 900,000 mt/year Moerdijk cracker in the Netherlands, the 740,000 mt/year Total/Ineos joint venture Naphtachimie cracker in Lavera, France, and Dow’s 565,000 mt/year Bohlen cracker in Germany have all restarted after outages, albeit at reduced rates.
The same consumer said he expects the styrene premium to increase as the benzene price is likely continue its downward trend on growing supply.
