Domestic PS supply limited in Mediterranean markets

Players in Turkey, Egypt and Italy are reporting limited supplies in their local PS markets, as per ChemOrbis. Apart from higher costs, the availability constraints are also supporting the recent firm sentiment in the Mediterranean region. Nevertheless, these three markets are all expected to face a slowdown in demand in the month of August. Availability concerns first arose in mid July in Italy’s PS market, helping sellers keep the monthly decreases smaller than the decrease in the styrene contract. Supply for HIPS is particularly considered tight in the region as a result of the shutdowns at major producers. Now that many sellers claim to be sold out for July and that they cannot receive additional allocation from their suppliers, speculations of price hike targets of up to €100/ton have already emerged for August. A manufacturer reported facing difficulties in sourcing his needs from his regular suppliers. “We have had to buy from different suppliers this month because of tight availability. Deliveries are late as well,” he complained. “Supply is very limited in the local market. Some of our suppliers have not accepted our orders due to lack of material,” another buyer commented. Higher styrene costs in Europe are also drawing a firm outlook for August although buyers argue that higher prices will not be justified when demand will be absent in the midst of summer holidays. Unlike Italy, local PS prices have already been on the rise for the last three weeks in Turkey. It was the beginning of July when higher costs in Asia mainly triggered the bullish trend as sellers started to offer Asian cargoes with increases in the import market, which was followed by European sources and local sellers. The distributors’ claims that prompt PS supply is very limited in the local market have also contributed to the firming trend in the country and local prices have risen by US$80-100/ton on average in the past three weeks. “We have a very small amount of material left. Our higher offers are finding acceptance and demand is not bad as the local availability is restrained,” commented a distributor. Another distributor said, “We are waiting for the arrival of our previous orders from the import market. We are not offering to the local market as we don’t have material in our stocks.” A trader also pointed to the limited availability. He said to ChemOrbis, “It is limited particularly from Europe. We are making offers at the moment but indeed we don’t have much material.” An official distributor of a West European producer also remarked, “HIPS supply from Europe is tight. However, we don’t expect large hikes due to a possible slowdown in demand during Ramadan.” Similar to Italy, demand is not expected to be great in August due to the Ramadan holiday. Similar to the Turkish market, local PS prices in Egypt have been firming up since early July in line with the import market. Local prices have gained US$25/ton for GPPS and US$80/ton for HIPS on average. Players reported limited availability in the local market this past week as buyers replenished stocks due to high Ramadan season. A buyer manufacturing injection products said to ChemOrbis, “Our end product demand is good. Trading activities may slow down during Ramadan as buyers have already built their stocks. However, we think that the trend will be stable to firm after Ramadan.” A trader offering on import basis commented, “Demand has already started to cool off this week, but I think that the market may maintain its stable to firm stance when Ramadan is over.”