US styrene prices hit their lowest levels in 2011 this week as derivative demand softened and falling feedstock values forced spot styrene lower.
On Thursday, spot values were assessed at 60 cents/lb, the lowest level since January 3 when the price was assessed at 60.30 cents/lb. However prices have continued to move south and are poised to hit a 2011 low to close out the week as spot was heard below the 60 cents/lb mark Friday.
"Prices this morning are below 58 cents/lb," a producer said. "Buyers are running", he added, explaining that the cost ladder should drop in response to feedstocks falling. Benzene was heard in the low 330s cents/gal level Friday, with spot ethylene well below the contract price -- assessed at 53.50 cents/lb on Thursday.
The last deal confirmed by the seller this week was done for October at 60.25 cents/lb for 5,000 mt.
One source attributed the low price of spot styrene to business being off 20-25%, few to no exports, and falling feedstocks. "Everything is unraveling," the source said. "Where is the bottom?"
On Wednesday, another market participant had pegged the September SM spot market closer to 60 cents/lb. Since then, however, benzene dropped about 10 cents/lb on lower energy -- NYMEX crude futures fell over $5 Thursday -- and downstream styrene demand has remained poor.
Year-on-year, arbitrage opportunities to export US spot styrene to Europe or Asia have lessened, according to information derived from the Platts database.
In 2010, the arb to Europe was open for periods in March, and again in May, June, and July followed by arb opportunities to Asia in September until export demand tapered off at the end of the year.
In 2011, however, small arbs to Europe were open in February and April to Europe, and the Asian arb was open to start September, Platts data showed. These arbs were open briefly, however, and US market participants were cautious in taking advantage of the most recent arb on paper to Asia. Since that time demand has begun to taper off once again.
According to data from the US International Trade Commission, the total number of exports from January to July 2011 from the US is 698,928mt, down 67,152mt from last year's January to July total exports at 766,080mt, a decrease of approximately 8.76%.
US exports for July of 2011 were at 69,899mt, down 52,042mt from the 2010 July total exports of 121,941mt -- a decline of about 42.67%.
In domestic downstream demand, one ABS producer reiterated that demand remained soft and no near term recovery was seen at this point and time. Several sources expected that demand would not pick for the styrenics chain through the end of the year and the outlook for 2012 remained mixed.
"The landscape [of styrene] is slowly changing," a source said.
Given the soft demand downstream, falling feedstock prices, and lower spot price, one producer said the September styrene contract price was expected to decrease, although the amount was not specified.
