Styrene Prices

London (Platts)--6Sep2011/751 am EDT/1151 GMT European styrene prices dropped $15/mt Monday as the market tracked weaker benzene and crude futures. Styrene prices were assessed by Platts at $1,445/mt FOB Rotterdam on Friday. The energy complex reacted to further financial market turbulence as European stocks plunged by about 5% in mid-afternoon trading on Monday, hit by tensions over the risk of recession in leading economies and debt in the eurozone. Market activity was reduced due to a holiday in the US which closed the markets there. In Europe, with benzene prices lower, both September and October values were seen priced at $1,430-1,450/mt FOB ARA but later prices moved lower, with October easing further on the suggestion that the market had become backwardated due to supply likely to be tighter in September than in October. Sources reported that September was pricing at $1,425-1,435/mt FOB ARA, while October was seen at $1,405-1,430/mt FOB ARA. A 1,000 mt parcel for September was heard done at $1,430/mt FOB ARA but details could not be confirmed. Despite the notion that a backwardation implies firmer demand, sources said that this was only due to the unscheduled cuts made in late August in addition to the scheduled turnarounds that are due to start in September. "October may well stay backwardated as it has less pressure on it...that should mean September should be higher as it is the tighter month," a trader said. Despite this, sources said that weaker demand from September onwards could lead to lower benzene and styrene prices. "Most [styrene] players are covered. Looking at the macroeconomic picture and production indicators there is a weakness," a second trader said. "Most people have been looking at supply but not demand, and demand is the weakest link," the same trader added. Sources also pointed to the inflationary effect of crude and how styrene was pricing against it. "Crude oil is much more expensive compared to styrene; Brent should be lower. The relationship to Brent, styrene is undervalued, while benzene was overvalued. Based on fundamentals, Brent should be at around $70-80/barrel," the second trader said.