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Wednesday, October 27, 2021

NWE styrene margins resume decline despite Moerdijk outage

European styrene production margins, which appeared to be rising after an explosion June 3 during maintenance at Shell-BASF’s Ellba joint venture in Moerdijk, the Netherlands, are falling again, Platts data shows.

Styrene’s premium over benzene dipped to $172/mt Friday, almost half the $335.50/mt on June 6, when styrene prices rallied on expectations that the styrene market balance could tighten if the Moerdijk outage lasted beyond the initially planned maintenance period.

The premium was last lower on April 9, when it was assessed at $163/mt. Styrene producers typically require a premium of $250-300/mt over benzene to make production economic.

After the initial spike in prices on the Ellba outage, spot styrene values have remained broadly stable, averaging $1,609/mt FOB ARA since June 4.

Further increases were limited by poorer-than-expected demand in June, and as imports from the US and higher operations in Europe had little or no impact on European length.

Additionally, although Shell declared force majeure on styrene supplies from Moerdijk after the blast, it was still supplying 100% of its contract allocations to customers for June and July.

“Polystyrene sales volumes in Europe are down 10% in May and June, and expandable polystyrene is down 6% versus last year,” a source said. “We don’t need that plant [Ellba], there is not enough demand.”

Benzene prices, meanwhile, shrugged off the initial Moerdijk sentiment, as they headed swiftly toward the $1,500/mt mark. The June price was assessed at $1,445/mt CIF ARA Friday, and discussions were already as high as $1,480-1,550/mt in Monday morning trading.

Benzene in Europe is currently underpinned by strength in the US benzene market, where short-covering has sent prices to their highest since February due to a number of production issues.

The June benzene price was assessed at 517 cents/gallon FOB US Gulf, the highest since February 20. The July DDP price, which is normally referenced for the transatlantic arbitrage, jumped to the highest level since December 2012.

– Platts.com

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