European styrene prices increase ahead of August contract settlement due to no imports, production cuts firming the market; bids now at US$1,450/tonne, US$150/tonne more than benzene after weeks of parity between the two grades

LOS ANGELES , July 30, 2012 () –

Styrene prices in Europe are gaining ahead of August contracts that are expected to be settled later this week, as a lack of European imports and production curtailments are tightening the market, reported ICIS news on July 30.

Sizeable increases in prices for both ethylene and benzene are expected in August, leading styrene market participants to brace for the same upward direction in pricing. Benzene prices, however, did dip last week due to crude prices easing.

Still, benzene retains a premium of US$20 to US$40 per tonne for the first half of August, and the market’s tightness is expected to continue into next month, said several market players, according to the Surrey, England-based chemical news service.

Benzene prices are being reported at about $100/tonne above the July contract settlement of $1,183/tonne. The U.S. market for crude remains strong, which is “driving Europe,” said one benzene trader.

Styrene lost ground in July but could recoup those losses in August, said one trader, referring to the €115/tonne (US$141) drop in the styrene barge contract price earlier in July, ICIS news reported.

A possible scenario in which benzene prices crash during the summer slowdown, causing a sharp decline in styrene prices, is making the market uneasy. In light of this, some customers are filling their immediate needs but not building stocks, said a polystyrene source.

Last week’s spot market for styrene was moving up, with bids at US$1,450/tonne. This represents a $150/tonne margin with benzene, which has sold at nearly the same price as styrene for weeks, reported ICIS news.

Several U.S. styrene units have been curtailed as producers refuse to convert benzene given the market conditions, and this is likely to further tighten the supply and demand balance over the coming weeks.

European output also is being kept under control due to the sluggish benzene market, causing suppliers to purchase material on the spot market; and this is expected to continue into August, ICIS news reported.

The primary source of this article is ICIS news, Surrey, England, on July 30, 2012.

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