US styrene arbitrage to Europe opens, fails to attract players

14-Aug-12

US styrene arbitrages to Europe has opened. However, as styrene supply is tight in the US and two producers down, many sources said producers and traders are not looking to take advantage of the arbitrage opportunity to Europe, as per Platts. US spot styrene rose 0.25 cents Monday to an assessment at 66.25 cents/lb (US$1461/mt) FOB US Gulf Coast, leaving an arbitrage window to Europe open. Producers have enough to cover in the domestic market that is currently steady and expected to remain steady in August. Export demand has been weak, with arbitrage windows to Europe and Asia closed for most of the year, except for a few short openings to Europe. Styrolution declared force majeure on its North American styrene business August 1 after a crack in a heat exchanger caused the company to shut its 950 million lbs/yr Sarnia, Ontario, styrene facility. After declaring force majeure, the company restarted its 1 billion lbs/yr Texas City, Texas, styrene facility at the beginning of August, a company source said. The plant had been down for maintenance since the end of May. Westlake Chemical is undergoing a turnaround at its 570 million lbs/yr Lake Charles, Louisiana, facility and will be down through August. European styrene for September was assessed on Monday at US$1530/mt FOB Amsterdam-Rotterdam-Antwerp. The US styrene price would need to be at 67 cents or lower, which it currently is, to work an arbitrage with freight at US$50-55/mt, according to Platts data. Many players anticipate that styrene prices that have risen quickly in Europe could fall just as quickly. "It's tough to make it work because it is a risk to send it over to Europe and have the price possibly fall within the 30-40 days it takes for it to get over there," a trader said last week when the arbitrage window first opened. Due to two outages, producers and traders have sought deals in the domestic market primarily, where they can sell in the high 60s cents/lb. Styrene rose as high as 68.25 cents/lb (US$1505/mt) FOB USG August 1 on the supply tightness, but it has since receded on lower feedstock benzene, which has fallen nearly a dollar in the last month, assessed at US$4.34/gal (US$1298/mt) FOB USG Monday.