The European styrene spot price hit a four-and-a-half month high on Wednesday as tightness pressured buyers to buy prompt product at sky-high prices, according to industry sources.
The 5-30 day spot price was assessed up $47/mt on the day at $1,302/mt FOB ARA Wednesday, the highest level since March 22. Spot prices have now gained $171.50/mt over the past week.
During the day Wednesday, H1 August was heard traded at $1,350/mt, with another unconfirmed trade at $1,370/mt.
Tightness was due to supply concerns as news emerged that Shel-BASF joint venture Ellba's propylene oxide/styrene monomer unit at Moerdijk was operating at a reduced rate of around 50%.
The unplanned shutdown of Shell's Pernis refinery in the Netherlands was heard to be compromising propylene supply, a feedstock for the POSM process.
It was unclear whether Shell's other POSM unit, also located at Moerdijk, was experiencing the same issue.
A source said that the cargo that traded at $1,350/mt could "possibly be the last one available with a EU origin," indicating acute tightness for European product.
The tight supply is, however, confined to the early part of August.
The second half of August was heard offered at $1,270/mt, $80/mt below the H1 traded level, with no buyers willing to bid at those levels.
The backwardation between any August and any September was assessed at $113.50/mt as the market hoped that supply pressures will ease into September.
Despite soaring spot prices, buyers managed to secure a Eur30/mt decrease in the August styrene contract price to Eur1,170/mt.
A buyer said that the decline reflected general August fundamentals -- as demand typically slows in the summer and some imported cargoes are expected to arrive -- rather than H1 August.
The spot assessment Wednesday was at a 6% discount to the August contract price.
