Styrene backwardation reached a 14-month high Wednesday, Platts data showed, as prompt market remains dry in Europe amid outages, but availability is expected improve drastically from the second half of November.
The premium that November-loading parcels command over December product was assessed at $130/mt at Wednesday's close. The last time it was assessed at this level was August 28, 2013.
For the best part of the year the styrene market in Europe was in contango, with only 42 days -- mainly in October -- assessed in backwardation, according to Platts data.
The November styrene price was assessed at $1,630/mt Wednesday, stable on the day. However, the December price tanked to $1,500/mt in the wake of the news that Shell is now aiming to restart its 450,000 mt/year styrene plant in Moerdijk by the end of the year.
Sources also mentioned the restart of a styrene plant in Germany scheduled for mid-December, but this information was yet to be confirmed the respective company.
In addition, up to 75,000 mt of styrene are earmarked to arrive in Europe in the coming weeks, with first vessels already arriving at the end of next week.
On the demand side, a seasonal decline in consumption could also add length to the styrene market in Europe, sources said. Some consumers also said they would rather delay buying by a week or so to take advantage of the expected fall in prices, meaning that the support for 1H November prices from the industry was thin.
As a result, the backwardation is expected to come off as the market rolls further into November, however rumored delays of shipments could keep the prompt market strong for slightly longer.
"The reality is the global styrene market is everything but short. Europe has been just an island [of high prices]," a source said.
