Seller confidence was growing in the Northwest European styrene monomer market Wednesday morning as sources bullish over forward direction on the back of scheduled turnarounds in September and Q4 at several major units in the region.
The first SM unit to go down is Ineos Nova's Marl, Germany, unit, which was expected to shut down between August and early October.
Shell Chemical/BASF will shut their ELBA unit after that, sometime within Q3-Q4. Neither Shell nor BASF were able to confirm details of the turnaround.
Styron's Terneuzen, Netherlands, unit would go down in the "autumn," according to the company.
Lastly, Total Petrochemicals will start a shutdown at its 600,000 mt/year ethyl benzene/styrene monomer unit in Gonfreville, France, in the fourth quarter.
In addition to this, Styrolution will reduce production rates at its 500,000 mt/year ethyl-benzene styrene monomer unit in Antwerp "at the end of August," a company source announced August 4.
One trader believed that with these turnarounds "the market will be reduced by around 14%" which others said will lead to a tighter and stronger market going forward.
Prices have, however, so far remained comparatively weak. August was seen at a bid-offer range of $1,450-1,470/mt for 1,000 mt FOB ARA barges Wednesday morning. This represented a premium of $205-215/mt to upstream benzene, which was at $1,245-1,255/mt 1kt CIF ARA.
According to one source a long-term average goal for the NWE benzene-styrene spread would be $260/mt.
One trader said he "expected styrene to be stronger than it currently is" and added: "Production is not there and it can't be replaced from outside Europe."
This point was supported by both US and Asia styrene currently trading at higher values than the NWE market.
Platts data shows that the FOB US Gulf Coast market closed at 68 cents/lb ($$1,498/mt) August 16, while at close of Asian trading Wednesday the FOB Korea value for September was around $1,490/mt.
A producer also felt the market could be set to strengthen and said: "There's a lot of noise, which is supply/demand driven and is real. September and October could be a hot spot, which could lead to a nice end of the year."
"The supply picture is clear and firm, but the thing that can change is demand. We are telling our sales guys to be aware of any changes from their customers," the producer said.
The trader felt, however, that "demand is not a problem" and noted that an increase "will come."
"[Buyers] just don't want to commit to volume at these prices. But it will come. The south of Europe is still in their holiday period and I think when they are back we'll see a natural change as buyers return," the trader added.
The producer remained cautious, however, saying the macroeconomic uncertainty in Europe was making buyers reluctant to come into the market with any aggression.
"There is the question of how demand is affected by the macro economic situation," the producer said, adding: "People are cautious and not overexposed. Nobody is sitting on any stock. None of us feels stable at present."
