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Saturday, January 22, 2022

NWE styrene market backwardation flattens as supply surges

The $120/mt backwardation seen early June in the European styrene market collapsed this week as a surge in supply lowered June prices.

Platts assessed June and July prices at parity at $985/mt FOB ARA Tuesday, flattening the market structure between the two months. Just over a week ago the backwardation was assessed at its steepest in nine months.

A rise in supply has pressured prompt prices lower, sources said.

Shell’s Dutch Moerdijk POSM-1 unit and Trinseo’s German Bohlen unit, with combined capacity of 10% of European capacity, came back on stream from scheduled maintenance works, which brought down June prices.

“All plants are running now,” a source said Tuesday.

In addition Total’s French Gonfreville unit, which declared force majeure in May due to a technical issue and labor strikes, was heard to have produced “more than they can get out the door” in June.

A second source said that they had high inventory levels which were waiting to be transported out of France.

Earlier in the week, deals for June and July were heard done at the same level at $990/mt and bid-offer ranges trended on parity on Tuesday.

Asia offered no support for June prices as the CFR China marker price dipped $7/mt on Wednesday to be assessed at $989/mt.

“[The Asian market] is weak in itself,” the first source said.

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