Feedstock costs for styrene in August have declined, but supply concerns in the styrene market have turned the market bullish, likely altering contract negotiations on Wednesday, according to industry sources.
The August ethylene contract price fully settled last week at Eur965/mt, a rollover, while the benzene contract price fully settled Monday at $757/mt or Eur645/mt, down $36/mt or Eur50/mt.
Taking an industry estimated formula of 0.29 ethylene and 0.79 benzene to produce ethylbenzene, a precursor of styrene, costs can be calculated at Eur789/mt for August, down 4.8% on the month.
Styrene spot prices have been falling for most of July, declining to $1,130.50/mt on July 26, a month-to-date low, and a significant decrease from $1,278.50/mt on July 3.
Lower spot, combined with an expected fall in feedstock costs, led styrene and downstream industry sources to anticipate a drop in the styrene contract price for August.
However, supply concerns emerged at the end of last week, with other outage problems heard on Monday, which turned the market bullish.
Last week, LyondellBasell/Covestro's propylene oxide styrene/monomer unit will undertake about five days of maintenance work at the beginning of August, according to industry sources.
The fire at Shell's Pernis refinery also affecting the styrene market, sources said.
Propylene is a feedstock to produce styrene through the PO/SM process.
Shell has propylene production at the site.
A source said Tuesday that a fall in the August styrene contract price was still possible, but if so the magnitude of the drop will be reduced.
The styrene spot price soared to a near four-week high on Monday on supply concerns. The spot price of styrene loading 5-30 days forward was assessed at $1,229/mt FOB ARA Monday.
Supply for the first half of August was heard to be extremely tight.
