Buyers of styrene in Europe have called for a rollover or a cut of up to Eur40/mt (around $44.75/mt) in the styrene June contract price citing a fall in styrene production costs.
The June styrene CP is expected to settle next Wednesday. The FOB barge May CP was settled at Eur1,120/mt ($1,252/mt), at a rollover to the April CP.
A rollover or up to a Eur40/mt fall points to a June settlement in the Eur1,080-1,120/mt range.
One source said Wednesday that the styrene CP should fall when looking at the “cost of styrene.”
The premium of styrene over its feedstock benzene reached $508/mt, the first time it was above $500/mt since early September 2015. This figure is more than double the profitable level of under $250/mt which is needed to produce styrene.
The source added that downstream expandable polystyrene demand had been weakening in May, despite May being a traditionally firm demand season. EPS is used in insulation and demand usually strengthens during the warmer months when the construction sector picks up.
The source continued that EPS prices fell marginally and that producers “lost some margin on EPS.”
A second source said that demand for another downstream product, acrylonitrile-butadiene-styrene, had also been easing in May. “Demand is softening,” he said.
The call for the fall in the styrene CP comes amid elevated spot prices which led to bullish expectations among some sources.
The styrene spot price touched the highest level since August 2015 on Wednesday, amid several planned and unplanned shutdowns.
The styrene spot price was assessed at $1,138/mt FOB ARA Wednesday, rising $25.50/mt.
Total declared force majeure on its styrene unit in Gonfreville, France, due to a technical issue and labor strikes in the country.
S&P Global Platts heard from sources that the Gonfreville unit was restarting and that the technical issue was resolved. The first source said that the problem was “purely logistical.” Total declined to comment.
Shell’s Moerdijk POSM-1 unit remains on scheduled turnaround. A company source said that maintenance works are expected to finish by the end of May.
Trinseo’s Boehlen unit also remains on scheduled turnaround and sources said that production is expected to begin by early June. Trinseo was not available to immediate comment.
Sources said that there were opposing dynamics affecting the June styrene market.
“There are really two different markets,” a third source said.
While some sources said that sky-high spot prices make an increase in the styrene CP feasible, other sources said that “spot is overheated and not sustainable.”
The third source expected spot prices in June to fall as the turnarounds come to an end.
Sources also expect imported product to arrive on European shores by the end of the month, which will help ease fundamentals.
The first source said: “if spot cools down, [there is] no room for [an] increase [in the contract price].”
