Northwest European styrene monomer prices fell $91.50/mt or 5.5% from the start of May to close Thursday at a one-year low of $1,553.50/mt FOB ARA, Platts data showed.
The last time it was lower was April 23, 2013 at $1,544.50/mt FOB ARA.
Hefty losses were attributed in part to lower-than-expected demand from the polystyrene segment, but mainly to burgeoning supplies in May.
Approximately 45,000-60,000 mt of imports were expected to arrive from the US Gulf to the ARA region and the Mediterranean by the end of May to early-June, following a wide arbitrage window that was open for more than two weeks at the end of April.
Market participants built up stocks in anticipation of a rally in May-June on expected higher seasonal demand and tighter balances given the planned maintenance of Ellba's 550,000 mt/year Moerdijk styrene plant and talk of reduced production at Styron's 500,000 mt/year Terneuzen unit.
But industry and traders appeared to have overcompensated for the expected tightness, market sources said, with tanks nearly full by mid-May.
"It is full, for sure, end-May," said a trader. "We would need some vessels to be delayed to see if things pick up," said a trader. "Fundamentals are quite balanced and it is more the US that is keeping things in limbo."
Meanwhile, market participants said some imports from the US Gulf that were originally headed to ARA had been diverted instead to the Mediterranean which typically imports around 15,000 mt of styrene on a contractual basis but was likely to receive around double that.
The May-June structure switched from a $15/mt backwardation on May 12 to be assessed at a $10/mt contango in one day.
In light of rapidly dwindling feedstock values in May, demand from the PS sector had declined as converters shied away from taking on "unnecessary" volumes for May.
"Some customers are looking into these figures, so for sure it creates hopes or expectations for a discount on SM and PS in June, and finally these may lead to hand-to-mouth buying," said a producer. "If I was a converter, I would squeeze my stocks to the utmost."
As a result, the NWE PS market was not seeing the typical seasonal pickup in demand that usually happens in April-May, participants said.
"Packaging and disposables is not doing so well, especially in Italy where a high portion is disposables and if people prepare for picnics, parties -- this is what we are missing so far this year," a market source said.
Demand from packaging led the decline, also with rising substitution from polypropylene and polyethylene terephthalate. Industry observers said PET was increasingly becoming a threat due to steep price discounting as well as a better product image.
Industry observers said styrene prices remained under pressure, but the market appeared to have found the bottom on Thursday following a May trade at $1,550/mt FOB ARA that prompted offers at the same level to move higher.
"The market is waiting for support to step in next week," said a trader. The rebound appears to have started in the East, as styrene monomer rose $5/mt day-on-day to close at $1,572.50/mt FOB Korea and $1,598.50/mt CFR China Thursday following a drop in China stocks, market sources said.
