Northwest European styrene monomer prices pushed upwards Wednesday, climbing around $20/mt for October on the back of widespread production outages in the region, although slow demand caused some to doubt the sustainability of current prices.
After closing at $1,355/mt Tuesday, market sources reported an October trade done at $1,360/mt for a 1,000 mt FOB ARA barge. The market rose Wednesday morning to be seen at a bid-offer range of $1,375-1,385/mt sources said.
The strength of the prompt market was shown by a steep backwardation to November, which traded in "the low $1,300's" Tuesday and rose a range of $1,320-1,340/mt today. According to one source "November is getting pushed up by the October rise."
The firmness of styrene contrasts sharply to feedstock benzene, which remained weak. October trade was heard done at $935/mt late Tuesday, which gave a spread of $425/mt to styrene -- the highest styrene-benzene spread since April 14, 2009.
The firm market was said to reflect a tighter supply situation, with several major SM units currently in turnaround in Europe.
There are some sources however, who have questioned whether the current prices are a true reflection of fundamentals, with demand said to be "average" by some and weak by others.
One consumer said: "I sold some of my October volume to trade. It was going to remain in my system until the end of the month, so I preferred to move it. I've not bought back yet, as I'm comfortable [for supply]. The mood simply is not there to buy. If someone offers me product at a price I don't like, I won't buy."
A trader believed that the outages in Europe would bring pressure to the market sooner or later.
"We will see an increase in demand the closer we come to the end of October," the trader said. "People have underestimated the need for October product from industry and this will also push up November," he added.
This view was supported by a second trader who said: "Sooner or later people will need to come in and buy. Stocks are not high in Europe."
The consumer disagreed, saying that many traders and producers were currently holding volume in the hope that the supply constraints force buyers into the spot market.
The consumer argued that fear of losses on the stock held -- which was bought during August and September at much higher levels -- was currently supporting the market.
"The only justification for these prices is consensus. If prices weren't where they are then people would lose a lot of money," the consumer said.
"A lot of players, including industry, put product aside to cover the turnarounds and to take into account problems with restarts. If there are no problems then there could be big trouble," he added.
