Spot styrene in USA starts 2014 at five-year highs and ends 2014 at five-year lows

The US spot styrene market rose from 5 year highs to start 2014 to 5 year lows to end the year. US spot styrene prices peaked in January, assessed at 80 cents/lb (US$1764/mt) FOB USG on January 16 amid record-high feedstock benzene prices, and stayed above the 70 cents/lb level until prices plunged in Q4. As per Platts, styrene prices are heading into 2015 with uncertainty. The US is a net exporter of styrene. Sources spoke of record margins in double-digits for spot sales in 2013 amid low feedstock benzene and ethylene prices, which made for low variable costs and the ability to work arbitrage opportunities to Europe and Asia. Interestingly, 2014 was the complete opposite. Benzene and ethylene spot prices each hit record high spot assessments during different parts of 2014, leading to higher variable costs for styrene, weakening margins and contributing to closed arbitrage opportunities to Europe and Asia for most of the year, sources said. In Q4-2014, US spot styrene prices fell after feedstock benzene plunged to its lowest level in 5 1/2 years. In addition, an arbitrage window to Europe opened during October and November, but European styrene prices dropped steeply over the last two months of the year, and US prices followed as the US market tried to keep the arbitrage open, sources said. US spot styrene was assessed at a 5 1/2 year low of 41 cents/lb FOB USG on December 16, according to Platts data. Because of the higher variable costs, weak margins and weak demand -- both from the export market as well as from downstream polystyrene -- many styrene producers ran reduced or underwent maintenance during parts of the year, sources said. Downstream demand in polystyrene was also impacted by the higher styrene and benzene prices as sources said demand was slower during many parts of the year, including in July and August, which is typically the heart of the summer polystyrene season. Polystyrene domestic contract prices hit record-high levels during February and then hit new record highs during July and August, with Platts assessing high-impact polystyrene contracts at US$1.36-1.38/lb delivered railcar and general-purpose polystyrene contracts at US$1.26-1.28/lb delivered railcar. With falling feedstocks to end the year, polystyrene domestic contracts also fell, assessed 13.50 cents/lb lower for GPPS and HIPS in December than at the peak in July and August. Looking ahead to 2015, most market participants said the expectation of lower feedstock benzene and ethylene prices would mean lower US spot styrene variable costs, but with arbitrage windows to Europe and Asia still closed, sources were uncertain when demand would improve.