Spot styrene prices gain momentum in Asia, Europe with higher crude, benzene

22-Mar-10
In Asia, spot styrene prices rose by US$30/ton FOB Korea over the past week in line with higher oil and benzene prices. As per Chemorbis, crude oil prices gained US$2.40/bbl in the last week, pushing Asian benzene prices higher by US$38/ton over the past week despite the slight softening on Friday. On the other hand, excessive styrene stock levels inside China which has led to weak buying interest due to chock-a-block storage space in the country. This situation coupled with the upcoming shutdowns in the region are expected to counterbalance each other leaving the styrene market in the middle but vulnerable to crude movements. Asahi is shutting its 390,000 tpa styrene plant in Japan in March and April for 3 weeks maintenance. Nippon Steel’s 240,000 tpa styrene plant will not be operating between March until end April for about 40 days for a turnaround. CNOOC-Shell’s 560,000 tpa styrene plant in China will be shut for an expansion for 8-10 weeks between March and May to raise styrene capacity to 700,000 tpa. Idemitsu will shut its 210,000 tpa styrene plant in Japan and Formosa will shut its 250,000 tpa styrene plant in Taiwan for about a month in April for a turnaround. In May, Samsung Total and Denka will implement a maintenance shutdown on their styrene plants in Japan for about four weeks. The companies have 600,000 tpa and 240,000 tpa styrene capacity, respectively. Looking at China’s PS market, despite the recent gains of styrene, Asian PS offers headed south during last week as sellers aimed to generate better buying interest. Initial April offer levels from producers represent US$10-30/ton decreases compared to the March offers while higher stock levels at the sellers’ side are cited as the main reason for these price reductions. Overall PS demand continues to be unsatisfying but players expect to see some sort of pick-up in demand in April, pointing to the traditional high season for PS applications. Taking the latest rally in styrene prices, approaching high season and high stock levels for both styrene and PS into consideration, mostly a stabilized outlook emerges for PS transactions in China for the near term. Meanwhile, in Europe, spot styrene prices gained US$50/ton (€36/ton) FOB NWE basis compared to the start of the month on higher crude and benzene prices. Benzene prices in the region jumped significantly as they recorded over US$100/ton increases on CIF NWE basis on Friday the 19th compared to Thursday on the back of overall low inventory levels. Looking at the Italian PS market, there seems to be opposite pressures coming from the higher feedstock prices and persistently slow demand. Due to the weak buying interest some sellers elected to down adjust offer levels by €10-20/ton at the high end of the ranges for West and South European origins although they still do not see much of an interest from buyers as their prices are continued to be found too high even after the recent cuts against more competitive Central European offers. However, despite the poor demand in the country, the April outlook still appears to be firm on the back of the higher feedstock costs, continuing tightness and the upcoming shutdowns. Dow Chemicals is planning to shut it’s 300,000 tpa styrene unit in Germany for about 8 weeks during April and May while their 120,000 tpa German PS plant is expected to be affected by their styrene shutdown and will not be operating during the same period. Meanwhile, Ineos Nova’s 300,000 tpa styrene plant in Germany will also be shut during April due to maintenance for about 10 days while the company’s 190,000 tpa PS plant will be shut for 4 weeks between April and May for a turnaround.
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