Feedstock costs for styrene in Europe have increased by 20% in January, leading to a fall in producer margins for styrene, according to S&P Global Platts data.
The benzene January contract price was fully settled at Eur806/mt, rising Eur175/mt or 28% from December. The ethylene January contract price was fully settled at Eur985/mt, up Eur45/mt or 4.8% on the month.
Benzene and ethylene are the main feedstocks for styrene.
Using an industry estimated formula of 0.79 benzene and 0.29 ethylene to produce ethylbenzene, the precursor of styrene, feedstock costs increased to Eur922/mt in January, up 20% on the month.
The styrene monomer contract price was fully settled at Eur1,300/mt, up Eur105/mt or 8.8%, a smaller increase than feedstocks.
This meant styrene's premium over its feedstocks declined 11% on the month to Eur378/mt, eating into producers' margins.
Sources had mixed views on the contract price level.
One trader source said the contract price was lower than expected considering feedstock costs and tight fundamentals in Europe.
This has been illustrated by the spot price which increased since the settlement to an assessment of $1,220/mt FOB ARA Thursday, trending at an 11% discount to the settlement.
A second buyer source said the settlement was on the "high side" although the level was reasonable considering the weakening exchange rate.
Downstream polystyrene sources, however, were less optimistic about the increase. Sellers of PS were keen to guard their margins by passing through the feedstock costs, according to sources this week.
