European polystyrene producer margins are set to rise in May as sellers are succeeding in lowering prices by a smaller amount than the fall in feedstock styrene, sources said.
The styrene monomer contract price was fully settled at Eur1,130/mt ($1,267/mt), down Eur245/mt month on month.
The GPPS and HIPS net contract prices were assessed at Eur1,310/mt and Eur1,400/mt FD NWE, respectively, Wednesday, down Eur200/mt month on month.
The EPS net contract price saw an even smaller decrease of Eur180/mt, and was assessed at Eur1,490/mt FD NWE Wednesday. That indicated that producer margins are set to rise Eur45-65/mt this month.
A GPPS converter said producers were now pushing for higher prices of around Eur10/mt this week compared with the beginning of the month as sellers became confident amid "seemingly strong demand".
"European producers are very rigid on their approach," a second GPPS converter source said.
An EPS buyer source said: "I am somehow disappointed. I expected I could decrease them a little more. But styrene spot increase played against my hopes."
A rising styrene spot price in May led to expectations the June styrene contract price would increase, which would have a knock-on effect to styrene prices.
The higher margins follow a difficult first quarter when producers were unable to pass on sharp increases in feedstock costs.
"Margins had been poor," an EPS seller source, adding: "[Margins] had to be better, otherwise [it would be] a disaster."
Nevertheless, some converters were keen to bring down prices, with a third GPPS buyer saying he wanted prices to fall Eur220-230/mt month on month, adding he expected prices to settle at a decrease of Eur210/mt.
