The Northwest European styrene monomer/benzene spread rallied to a month-high Tuesday of $203/mt on stronger styrene, rebounding from a one-year low of $148/mt established April 4 but still representing deeply negative production margins, Platts data showed.
Resurgent styrene monomer spot prices in April were the main contributing factor to the improved spread to feedstock that was founded upon tightened balances and stronger demand from derivative products.
NWE spot prices rallied $21/mt, or 1.3%, on the session to close at a two-month high Tuesday at $1,647.50/mt FOB ARA, with the last high seen at $1,652/mt FOB ARA on February 4.
The availability of spot product in May was increasingly scarce, with Ellba shutting its 550,000 mt/year SM plant in mid-April for a monthlong maintenance and with ethyl-benzene/styrene monomer producers like Styron and Total likely to continue running reduced on poor economics, market sources said. Regional producers typically break even with a styrene/benzene spread of $250-300/mt.
The May-June forward market structure was clearly in backwardation, as a seasonal pickup in demand downstream going into the peak summer season for polystyrene, expandable polystyrene and acrylonitrile-butadiene-styrene was also expected to prove supportive, sources added.
"If you compare to last year, demand is extremely bullish, but if compared to a normal year we are above average, but less dramatic," a producer said. "We are happy in terms of volume, but not on margins."
With Europe holding the highest price position in the world, industry observers were cautious with the widening price gap between Asia and Europe, which could see product flow from East to West, running contrary to expectations of the reverse due to a spree of planned maintenance in Asia.
Asian SM prices were assessed at $1,604.50/mt FOB Korea on Tuesday, $43/mt lower than Europe. In the US, spot styrene bounced 1.1 cents overnight to 71.65 cents/lb FOB USG ($1,580/mt), which left sufficient margins for market participants working the US-Europe arbitrage.
Meanwhile, benzene spot values are likely to remain buoyed at relatively high levels in the second quarter, attributed to scarcity. Benzene values hit a one-year high January 16 at $1,533/mt CIF ARA and the market's structure had been mired in a steep backwardation from the start of the year.
"I don't see the situation change until perhaps June," a trader said. "Ultimately it will remain tight here until we see imports and I do not see any yet."
