Load port congestion in the NWE styrene market could persist into December, as weak PS demand, a steep backwardation of around $125/mt and strict inventory management leads buyers to nominate at the start of the month, sources said.
"[The congestion/supply problems are] still there [but] you are going to see worse in December as the there are only two days before the weekend at the start of the month," a trader said.
The supply bottlenecks seen last week led to concerns that some sellers may not be able to or were unwilling to supply on standard five-day contract dates, as nominated.
As a result, traders, producers and consumers were unwilling to keep product in storage, something that would result in margin losses due to the cost of storage and finance.
"No trader wants to store and they [traders] have gone into November with tanks empty. It's a logistical nightmare," a second trader said.
"The backwardation and market sentiment means people are running very thin and it [market sentiment] will be very soft into the end of the year," the first trader said.
These difficulties were confirmed by the first trader, who last week was waiting to pick up material from Maasvlakte, which, along with Moordijk, is a major congestion point.
"I'm having a nightmare getting product," the trader said, adding: "I wouldn't say that they [sellers] haven't performed at all. They say they are trying to resolve, but I don't know."
One of the traders, who as a seller initially encountered problems in supplying said: "My supplier said it could not supply me until the second half of November so I found another supplier and they allowed my buyer to load on November 9, and they agreed. They will have their product," a third trader said.
With the supply chains being impacted by the delays, some sought to point to producers not having enough product available to supply at the start of the month, however, producers said that traders should have had enough in storage to mitigate any of the logistics issues which were considered inevitable.
"There is producer jetty congestion, even if they are all available. The level of backwardation is such that you will get all the nominations at the start of the month," a producer said.
"There is a sudden congestion that blame is [then] passed on to the producer. The [contractual] norm is that product is available within five days. The risk [then] is that it runs into a pricing issue. If we can't [fulfill] we look at compensation," the producer said.
The producer referred to the maintenance shutdowns in place in November and the strict working capital and inventory management due to poor derivative demand that were compounding the logistics issues.
"Everyone is putting in nominations, tanks are running empty and traders are replenishing orders rather than meeting supply. The system has been running too lean for too long that it has hit a bottleneck on the first. Everyone has held off until now."
