Will limited PS demand lead to sales pressure on European sellers?

10-Mar-11
In Europe, PS prices rose significantly for the third month in a row. Styrene costs continue to put pressure on PS markets as they retain their upward momentum since the start of 2011. Plus, crude oil prices hovering above the $100/barrel threshold, support the upstream markets. Supply concerns are adding to the sentiment, forcing PS sellers to raise their prices further for March. For the last couple of weeks, PS sellers in Italy have been mostly revealing their spot prices with increases of €30/ton in line with the March styrene contract increase. However, they lack support from the demand side as buyers are paying these new prices only for limited quantities like they did in the previous months. Being aware of the cost pressure on regional producers, the majority of buyers, who are still facing poor demand from their end product customers, are delaying purchases while some are looking for import alternatives to pay less. “So long as PS prices continue to rise, we don’t expect to see any improvement in our end product business,” a packaging producer reported, complaining about the difficulty in reflecting the relentless increases on his end product customers. Unhealthy PS demand in Europe is affirmed by an increasing number of European offers seen in Turkey, where the market is seeing similar March increases from regular European suppliers. This origin, however, is not found competitive in Turkey either, with players expecting to see some downward revisions from producers’ initial prices, pointing to the high exchange rate. This week, a large scaled converter in Turkey claimed that he already received a good discount from a West European producer’s initial prices. European sellers are trying to get rid of their stock pressure these days, he speculated. Indeed, some buyers and distributors in Italy are also opposing the idea that supply tightness is persisting in Europe. Following a buyer, who claimed that he received many phone calls from sellers this month, a distributor reported this week that he feels supplies are not very tight on the producers’ side.
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