NWE styrene margins at five-month high amid strong demand from Asia.
Production margins for European styrene have hit a five-month high after the market surged this week amid strong demand from Asian buyers, sources said.
The European spot price of styrene rose $39.50/mt Thursday to be assessed at $1,087/mt FOB ARA, a 22 week-high. That followed on from strength in Asia where styrene prices hit a 16 month-high at $1,184/mt CFR China Thursday after rising $55/mt day on day.
On Friday, Asian prices rose a further $25/mt to $1,209/mt CFR China, putting the Europe-China spread at $122/mt.
As a result of the moves in Asia, the arbitrage from Europe has opened wide, prompting traders to scramble for material to ship to Asian buyers.
Bids for November and December-loading styrene in the Antwerp-Rotterdam-Amsterdam region were heard at $1,080/mt, with no offers in sight.
Meanwhile, styrene feedstock benzene has sailed calmer waters throughout the week, albeit rising $12/mt Thursday to $657/mt CIF ARA, pricing nearly at parity with the November contract price of $659/mt.
The European spot price of ethylene was assessed at $906.10/mt FD NWE Thursday, having fallen nearly $100/mt over the course of two weeks.
European ethylene prices have come under pressure recently due to crackers coming back from outages and low demand from polyethylene producers.
Using an industry-estimated formula of 0.79 benzene and 0.29 ethylene to produce ethylbenzene -- the precursor of styrene -- points to a styrene premium over its feedstocks of $305.20/mt, up from $92.52/mt on October 6, when the styrene premium to feedstock ethylene and benzene hit its lowest point this year.
A number of turnarounds at styrene plants are taking place this month in Asia, and the market has widely been expected to remain tight in Asia in the fourth quarter.
In Europe, BASF has resumed production of styrene monomer at its Ludwigshafen site in Germany after a halt following a pipeline explosion at the site on October 17.
