Rising styrene prompts higher July PS announcements in Europe

The European PS market shifted direction at the onset of July after players wrapped up their June business with decreases of up to €50/ton, as per ChemOrbis. The main trigger behind the reversal is soaring benzene and styrene costs in the region throughout the past month. Sellers are now seeking three-digit increases which exceed the €82/ton rise on the styrene contracts for July. Following the styrene settlements on Tuesday, West and South European producers revealed hike requests between €80-100/ton when compared to June. Although some players opine that these initial targets may later be moderated as activity is not brisk ahead of the holiday season, sellers are adamant to obtain at least the styrene gain. “We officially announced €100/ton increases for July and we are currently offering €85-100/ton hikes. We may adjust our prices down during negotiations though. We expect to see satisfactory demand in Italy, stable over June, whereas demand from the North European market may wind down due to holidays,” a source from a West European source reported. The explosion at the BASF-Shell joint venture pushed monomer prices up, while styrene supplies are now adequate to demand in Europe, he also opined. Another West European PS producer, who finished June sales with €40-45/ton reductions, already predicted that the market would see €100/ton increases due to firmer costs before monomer contracts settled up. A South European producer expressed their July sell ideas €100/ton above last month. “Although we are yet to determine our new offers, we plan to ask for the monomer increases at a minimum to cover our higher costs. Actually, PS demand is good even if it is not so brilliant. It may be hard for buyers to accept such sharp hikes and they may try to pay only styrene increases,” a source at the producer stated. A distributor of a West European supplier also opined, “We heard about possible attempts for €80-100/ton hikes. These steep increases are caused by rising feedstock costs and tension in Iraq while they are too high to be accepted. Now that holidays are approaching, they are more likely to pass in September.” A food container maker received €90-100/ton hikes for West and South European origins. “We will be covered until September as we built some stocks in June. Hence, we don’t plan to negotiate with our supplier although he told us that he may revise his prices later in the month according to demand,” the buyer noted. It will difficult to pass these large hikes onto done deals as demand is not that vivid while supplies are comfortable, according to him. “We were called by different traders who informed us that they retained some stocks from June at competitive levels,” he added. A disposables converter argued before the monomer settlements, “Even if producers will ask for increases beyond a possible styrene rise, PS prices will not exceed May levels. We don’t expect any increases over €45-50/ton to pass for July. We may buy some competitive spot Egyptian and Russian cargos if West and South European prices rise steeply. A food packager in Germany was offered West European PS cargos with €80/ton monthly increases. “We expect to pay this request in line with monomer contracts. We are operating at full rates while we plan to shut our plant for 1 week of maintenance in August although we foresee stable end product demand,” he highlighted. Converters in France also received €80-100/ton PS increases in the first week of July. “We will not purchase prime material this month as we received €85/ton hikes but will prefer recycled material. Indeed, we don’t plan to buy anything until the end of August when we expect the market to turn soft,” a sheet extruder producer said, adding that they will close their plant for 2 weeks next month for holidays. Another converter noted, “We are surprised to hear €100/ton hikes considering unsupportive demand. We will negotiate to pay smaller increases as new prices will erode our margins on end products.” A disposables converter expects to close his July deals €80/ton higher as he was offered. “This is a reaction from producers in order to cover their margins after June drops. This will be their last chance as July will be the peak season for PS before it finishes,” he argued. In nearby Turkey, initial West European PS offers emerged with similar increases over June. "Our supplier announced €100/ton increases for July," a trader offering on behalf of a regional supplier reported. “Overall demand is not so encouraging now that Ramadan started,” he said. The same origin had recorded €35-45/ton decreases for June. According to ChemOrbis, in upstream markets, the July styrene contract settled at €1442/ton ($1970/ton) FOB NWE, up €82/ton ($112/ton) from June driven by the bullish spot styrene market. As for benzene, July benzene contracts were also settled at €1076/ton ($1470/ton) CIF NWE, up €99/ton ($135/ton) from June. Spot styrene costs soared by $90/ton on FOB NWE basis in a period of one month, while spot benzene prices surged $150/ton on CIF NWE basis in the same period.