Northwest European styrene monomer feedstock costs for February are set to fall as a bearish ethylene market adds to further downward pressure from a strong expectation of a drop in the benzene contract price for the month, industry sources said.
This follows a short technical interruption last week at Shell’s Wesseling steam cracker in Germany, which has an ethylene capacity of 260,000 mt/year and a benzene capacity of 160,000 mt/year, according to Platts data.
With the cracker running steadily again and little else to prop up a bearish benzene market, talk of a decrease in the February MCP resurfaced this week, after being momentarily silenced by the Wesseling interruption.
NWE benzene spot barges for delivery 5-30 days forward were assessed at $594/mt CIF ARA Tuesday, down $6.50/mt on the day and $72/mt since the start of the month, putting the spot market at a 7% discount to the January MCP of $641/mt (Eur585/mt).
There was a similar story for ethylene prices which have fallen $55.50/mt since the beginning of the month to $818/mt FD NWE Tuesday, leaving market participants bearish for February.
Looking ahead, one industry source expected the styrene market to be driven by feedstock costs as styrene supply-demand fundamentals have been largely balanced, leaving an expectation that February prices will follow upstream movements.
Ethylene and benzene are used to produce ethyl-benzene, the precursor for styrene monomer. Ethyl-benzene costs are calculated using industry-estimated production ratios of 0.79 for benzene and 0.29 for ethylene.
NWE styrene monomer spot barges values were assessed at $820/mt FOB ARA Tuesday, down $15/mt on the day and $85/mt since the start the month, Platts data showed.
Current styrene prices put the spot market at a $238/mt or 22% discount to the January MCP of Eur975/mt ($1,058/mt), ahead of the February MCP settlement due early next week.
