9 Aug, 2018
Two major styrenics producers pioneered August hikes in Europe by revealing their PS offers with larger increases than the styrene hike of €20/ton. This came as a surprise to many players who were mostly expecting a stable to slightly softer trend both for styrene and PS.
Spot styrene prices rebounded from a 7-month low by mid-July in response to firmer Asian markets and regional production hiccups and cumulative increases reached around $100/ton on average, according to ChemOrbis Price Wizard. Data also reveal that spot styrene prices on FOB NWE basis have recently reached their highest levels not seen since early June.
Following suit, some PS sellers applied increases between €10/ton and €40/ton on their offers and fresh August deals were closed €20-30/ton higher for West and South European material.
“One of our suppliers had tighter PS availability and therefore, we had to pay €30/ton increases for August. We also secured some West European PS with increases of €20/ton,” argued a buyer.
Although a few buyers have already paid increases on initial August deals, others have approached these cost-driven hikes with skepticism, citing the lack of healthy demand during summer holidays. This coincides with other sellers’ plans to roll over their offers as the month wears on.
In Italy, a distributor said, “We started to offer with some increases in line with our supplier’s hike attempts of €30/ton. However, we are sure that we will close our deals at stable levels as the market will not be able to absorb any increases given slower-than-usual demand. Moreover, we will run our stocks down before engaging in new purchases.”
A distributor in Germany decided to offer with €10-15/ton hikes despite his supplier’s official hike attempts of €30/ton. He also said, “We had to adjust our offers as demand is weak and supply is regular. We might concede to rollovers later on as the market is not supporting any hikes.”
“We received offers with €20/ton hikes but we will push for rollovers instead. Weak demand will weigh down on the market,” a sheet extruder from Austria reported.
The upstream markets will apparently be a crucial factor to watch for PS players in the coming days. If supply issues for styrene exacerbate, buyers might decide to replenish stocks in order not to pay larger increases in September. A buyer from Belgium affirmed, “We will evaluate whether to buy some material in August or not to avoid possible September hikes.”