US styrene monomer could flow into Northwest Europe during late October and November as the arbitrage between the two regions is set to open after the restart of a major SM production unit in the US, market sources said Tuesday.
The FOB USGC balance October market was valued at 55.55 cents/lb ($1,224/mt) at close October 10. With freight and ARA storage costing a total of $65/mt, there was a narrow margin to arb into NWE according to sources.
One European trader believed the opportunity to export between the two regions could increase with the restart of Ineos' Sarnia plant.
The Sarnia plant, in Ontario, Canada is up and running this week at regular plant levels, said a company source late Monday.
It was shut for about two weeks to repair a mechanical problem. It has the capacity to produce approximately 950 million lbs/year of styrene.
Ineos also plans to keep its Texas City, Texas, styrene facility running even though the Sarnia plant has restarted.
The Texas City plant has the capacity to produce approximately 1 billion lbs/year of styrene. The Texas City plant was initially restarted to maintain supply of SM while the Sarnia plant was offline and will remain online "for the foreseeable future," the source said.
This prompted a European trader to say that "styrene is being pumped out" in the US, adding: "[The arb] is open but only on the margins. I think it will get larger and then lots of product will get booked. If there's a big arb its going to come."
According to other sources, there is already product on the water to NWE from the US. One trader said: "Styrene cargoes are still being shipped on a regular basis. 17,000 mt was lifted out of the US Gulf recently. Most of it probably heading towards ARA."
The trader added that the volume lifted recently was made up of "both" regular term business and product that was shipped because of arbitrage opportunities.
A third source said that "some product is already heading [to NWE]", but was less sure that product would be able to move.
The source said there was currently "no more prompt styrene in the US" noting that any new shipments would be for "mid-November arrival" in Europe "if you can load prompt."
The source added that he saw US prices at 56 cts/lb, which cast doubts over the economics of exporting.
"Even if you can can [load prompt], the cost is $1,235/mt FOB US Gulf. Plus $50/mt freight and $15/mt to convert the material into FOB [when it lands in ARA] and you are looking at $1,300/mt FOB cost for November," the source said.
November prices were seen climbing Tuesday morning however, at a bid-offer range of $1,295-1,320/mt for 1,000 mt FOB ARA November barges.
