Italian Polystyrene players agree on weak July outlook

23-Jun-10
Over the past week, Italy’s PS market was lackluster as buyers preferred to buy on a hand to mouth basis. As per Chemorbis, the main reason behind buyers’ cautious behavior was their confidence of further decreases by European PS producers next month. Spot styrene prices that have lost around €81/ton in Europe since the start of June, the persistent downtrend in other PS markets across the globe, along with slow buying interest were amongst the major factors supporting buyers’ expectations as fluctuating crude oil and benzene prices do not stand as a clear reference for now. After six straight months of increases, Italy’s PS market saw lower prices this month due to large decreases seen in the upstream chain. However, supported by the persistent tightness in the region, PS sellers managed to keep the decrease amount relatively limited this month compared to June styrene contracts, that settled with a large decrease of €73/ton from the May level. In the spot market, June deals have been concluded with monthly decreases of €20-50/ton so far, which is less than what buyers originally asked for based on the larger decrease seen in this month’s monomer settlements. Having obtained relatively moderate decreases, Italian buyers are now foreseeing that producers will concede to further decreases on their July prices since they will not be able to hold their current prices against this month’s plunge in European spot styrene prices as well as poor demand conditions. “Current prices are overheated. Even though we are facing good end product demand, we are having difficulties in convincing our customers to pay our costs,” a converter complained. However, most producers seem determined to limit the decrease amount for July in relation to the styrene contract like they managed to accomplish in June. Although traders agree that poor demand and lower styrene prices are likely to overshadow the supply tightness next month, they still hope to avoid giving the full styrene decrease. “Having reduced our prices by €40/ton this month, we are holding our offers at the same level as early June. Supplies are tight so we expect to see further but small decreases in July too,” a trader commented, while a buyer also echoed the same comments saying “We heard about further decreases regarding July, although they can be held in check by tight supplies and the low euro/dollar parity.” Indeed, lower production costs back buyers to ask for larger decreases next month as a theoretical PS price based on current spot styrene prices indicate a huge price gap of €185-285/ton between current GPPS offers in Italy and the production costs which were calculated by adding an estimated conversion cost of €150/ton and a €40/ton inland freight rate on top of the euro translation of current spot styrene prices in the region.
  More News  Post Your Comment
{{comment.Name}} made a post.
{{comment.DateTimeStampDisplay}}

{{comment.Comments}}

COMMENTS

0

There are no comments to display. Be the first one to comment!

*

Name Required.

*

Email Id Required.

Email Id Not Valid.

*

Mobile Required.

Email ID and Mobile Number are kept private and will not be shown publicly.
*

Message Required.

Click to Change image  Refresh Captcha