Amid global styrene price drop, NWE styrene premium to benzene dips below US$400/mt

11-May-16

Amid global styrene prices drop, Northwest European styrene premium to its feedstock benzene fell below US$400/mt for the first time since April 13, as per Platts. Styrene was assessed at US$1068.50/mt FOB ARA Monday, down US$14/mt from Friday, while benzene was assessed at US$677.50/mt CIF ARA Monday, down US$1/mt. This places the spread between the two at US$391/mt in Europe. Weakness in the European market reflected lower prices globally. A styrene source based in Europe said Tuesday that there was "not a lot of demand" in the European market at the moment, adding that many styrene buyers were in no rush to buy product as they had enough inventories. A second source said Monday that Shell's POSM-1 unit which is currently on turnaround is expected to start up this week, which will ease supply. The first source added that weaker sentiment upstream had also placed downward pressure on styrene prices. Front-month ICE Brent futures closed at $43.63/barrel on Monday, down from $45.37/b on Friday. Despite crude falling sharply Monday, benzene prices were range-bound. Sources said this week that spot activity in the benzene market had quietened following the May contract price negotiations at the end of April. is valued at US$36.13 bln in 2015 and is expected to reach US$65.4 bln by 2022 growing at a CAGR of 8.84% between 2015 and 2022, according to Stratistics MRC. Rising demand of polyethylene teraphthalate from food and beverage sector, increasing demand for packaged food, rise in demand for electronics and automotive applications and eco friendly substitution are the major driving factors of the market. Furthermore, factors such as rapid urbanization, innovative packaging and high economic growth are favoring the market. However, factors such as growing environmental concerns and strict regulations imposed by governments are hampering the growth of the market. Moreover, economic fluctuations and volatility of crude oil prices is also likely to hinder the market.