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Thursday, August 11, 2022

European styrene market turns bearish as more US imports head trans-Atlantic

Further styrene monomer imports coming into the Amsterdam-Rotterdam- Antwerp hub from the US Gulf Coast are driving bearish market sentiment and an expectation of continued price decreases in the second half of September, according to industry sources.

At least 35,000 mt is already fixed for September delivery with a similar quantity expected in the first half of October, sources said. This comes after 70,000 mt of material was shipped into Europe during August.

The influx of imports has weighed on European styrene monomer prices, which have fallen $233.50/mt or 21% since the beginning of the month and by $418/mt or 32% over the last 30 days, Platts data shows.

NWE styrene barge values for both September and October were assessed at $895/mt FOB ARA Friday. The market structure at the beginning of the month was a $146/mt backwardation, the steepest in five months, according to Platts data.

As a result, styrene purchases from the downstream polystyrene and acrylonitrile-butadiene-styrene markets have seen a sharp drop.

One expanded polystyrene producer said it was risky to have high stock levels in light of the bearishness in the styrene market and given expectations of a decrease in feedstock costs for September, which his consumers would expect to be passed on in to EPS prices.

Current styrene prices put the spot market at a $462/mt or 34% discount to the gross September contract price of Eur1,200/mt ($1,357/mt).

Looking ahead, one trader expected more US material to flow into Europe, as Asian demand remained lackluster and would not provide an outlet for US material.

With freight between the regions at $65-$75/mt and US prompt styrene at 38.25 cents/lb ($843/mt) FOB USG, the USGC-ARA arbitrage for both September and October is closed on paper.

Another trader source added that a large proportion of the incoming imports was unsold and with Trinseo’s maintenance during September at its 300,000 mt/year styrene unit in Bohlen, Germany expected to conclude at the end of month, the outlook for the coming weeks was bearish.

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