Players in the European expandable polystyrene (EPS) market this week confirmed that prices in July have fallen by an average of €90/tonne. Further information was available, which indicated that there were some variations, depending on the source of material. Some producers conceded falls of €100/tonne or more, while one said it reduced its price by around €80/tonne.
The focus of attention is now on August values. Players expect an imminent announcement of styrene monomer price increases. When the monthly barge contract prices are published early next week, it is thought they will reveal a hike of approximately €100/tonne, on average.
Players on both sides of the market believe higher monomer numbers will herald an increase in the EPS price. However, there is some divergence of opinion on how substantial that may be.
One producer said it has not yet crystallised its target but is likely to seek a rise of around €130/tonne in order to achieve an improvement in margin, on the assumption that the cost of styrene goes up by about €100/tonne. While agreeing that producer margins are now worse than in 2010, another producer said it would be surprised if sellers are able to achieve as much as plus €100/tonne in August. Nevertheless, it aimed to pass on the whole styrene increase where possible.
Sources report favourable demand. One supplier commented that soft prices in recent months have been due to over-supply, as producers ramped up volumes on the basis of excessively optimistic forecasts of consumption in the summer. However, it said buying interest has picked up noticeably since the middle of July. Another producer thought that converters that have kept an eye on developments in Asian styrene pricing, have realised European values will be heading up and are eager to re-stock in advance of price rises over the next two months.
On the buy side of the market, a converter of both block and packaging grades said the latter sees good demand, although activity in the insulation sector in some parts of central and eastern Europe is weak. It added that sellers also appear to have become reluctant to release material for delivery before the new styrene prices are known.
The European styrene market was subdued this week as players waited for the August barge contracts to settle. Activity was sparse, with buyers electing to remain on the sidelines. Many feel the market has become overheated, one trader said, adding to the muted feeling during the week. Spot values were at $1,500-1,520/tonne FOB Rotterdam on Friday, up $20/tonne from the previous week’s close.
$1= €0.70
€1 = £0.88
This week on ICIS www.icis.com
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