Nwe Styrene Premium Over November Feedstocks Hits 2015 Low at Eur237.77/Mt

The Northwest European styrene monomer premium over feedstock costs has fallen to a 2015 low, Platts calculations show, as a balanced market left consumers eager to normalize November spreads over feedstocks to levels similar to the start of the year.

This comes after a long period of high margins over feedstocks during the second and third quarters (see table below), which was attributed to maintenance at domestic production plants which caused severe supply tightness and substantial premiums over feedstocks.

The November styrene contract price settled at Eur960/mt FOB ARA ($1,059/mt) Monday, down Eur30/mt from the October MCP, putting the premium over feedstocks at Eur237.77/mt, a drop of 25% or Eur78.98/mt on the month.

The settlement was within market expectations despite a month-on-month rise of Eur49/mt in feedstock costs for the month.

The November benzene contract price rose Eur62/mt on the month to Eur582/mt while the ethylene MCP rolled over at Eur905/mt FD NWE last week, putting styrene feedstock costs at Eur722.23/mt for November.

Ethylene and benzene are used to produce ethyl-benzene, the precursor for styrene monomer. Ethyl-benzene costs are calculated using industry-estimated production ratios of 0.79 for benzene and 0.29 for ethylene.

Market participants were bearish on fundamentals in coming months, driven by a combination of end-of-year inventory management, which would limit styrene demand, and the restart of Ellba's POSM-2 unit at Moerdijk, the Netherlands, which remains on schedule for between December and January.

The Ellba plant has a nameplate capacity of 550,000 mt/year of styrene monomer and represents around 8% of total European production. The unit also produces 250,000 mt/year of propylene oxide, according to Platts data.