The premium of styrene over benzene in the Northwest European market rose to a nine-month high of $448/mt Thursday as spot price trends between the feedstock and its derivative diverged, Platts data showed.
The premium, assessed Thursday, was the highest since September 26, 2012.
The persistent decline in the spot benzene values over the last two weeks saw benzene prices drop to the lowest level since the end of March, Platts data showed.
Spot benzene barges were assessed at $1,238/mt at Thursday's close, $107/mt down from where they traded June 13.
The sharp downward correction in Europe happened against a backdrop of finishing turnarounds at crackers and aromatics extraction units.
BASF and Total completed maintenance works at their Antwerp and Carling facilities, sources at the companies said this week. Earlier this month sources reported that Ineos Cologne and Slovnaft also restarted their aromatics extraction units in Cologne and Bratislava.
These restarts in addition to increasing use of naphtha at crackers contributed to a general feeling of a better availability of benzene in the European region.
The bearish effect of the production capacity restarts was exacerbated by the weakness in the global benzene markets and swelling inventories in Asia and the US.
Despite a beleaguered feedstock market, styrene monomer spot values have retained relative strength against benzene on a combination of tight prompt supply and rising demand.
Since the middle of May, the FOB ARA benchmark has been buoyed above the $1,650/mt mark, hitting a four-month high of $1,727/mt on June 17, as benzene trended south.
The resilience in styrene was primarily attributed to tight prompt supplies on the back of reduced plant operations across the region and a lack of alternative supplies from the US Gulf.
Coming out of a heavy turnaround season in the second quarter of the year, coupled with production issues at Total's Gonfreville styrene plant and Shell Chemicals' Moerdijk unit, producer and end-user inventories were fairly depleted by the end of May, market sources said.
Exacerbating the tight supply, Styron shut its 500,000 mt/year styrene plant at Terneuzen and its 300,000 mt/year Bohlen styrene plant in succession in May and June, respectively for maintenance works.
The producer had also been fairly active in the spot market in May-June covering some of their requirements with prompt spot purchases, providing additional support to prices.
Styron plans to restart its Bohlen unit by the first-half of July, while operations at Terneuzen were on the rise, the company said this week.
By the end of June, although most of ethyl-benzene/styrene monomer plants were ramping up production rates or running full given the styrene/benzene spread, propylene-oxide/styrene monomer run rates remained curtailed by poor PO economics.
"Lower POSM rates have more impact than slightly higher EBSM rates and some EBSM capacities are down or running lower like Styrolution and Styron's Terneuzen," said a trader.
In addition, Styrolution had shut its 1.7 billion lb/year Bayport, Texas styrene plant this week for maintenance works. There was no detail or information about how long the maintenance would last and Styrolution was unavailable for further comment.
But some market participants said the effect of Styrolution's shutdown at Bayport had been exaggerated as the company's shipments of styrene from the US Gulf Coast to ARA in 2013 has been less regular, suggesting either less frequent or lower requirements and the actual volume loss might not be much.
But US exports from the second quarter of the year to the ARA region have been substantially reduced, therefore Europe would be unlikely to see any incremental supplies from the West going forward, sources added.
On the flip side, styrene demand increased from May to June particularly from the polystyrene and expandable polystyrene market.
Consumption volumes further downstream in the building and construction, appliances, food and beverage packaging and white goods sector rose steadily throughout June, PS converters said, albeit still at lower levels on a year-on-year comparison.
