Production costs for US styrene climbed above 47 cents/lb [$1,036/mt] this week as benzene spot prices rose, according to Platts data.
The increased costs made it difficult for traders to fill a potential arbitrage opportunity to Europe.
Several styrene deals were done in Europe near $1,100/mt FOB R'dam for September on Tuesday. After adding on $55 to cover freight and other costs,the US price would have to be near 47 cents/lb to profitably ship USG styrene to Europe.
Late last week US styrene producers offered cargoes at 47 cents/lb FOB USG. At that time, the US benzene price was near 283 cents/lb. Since then,bids for August benzene have climbed to 288 cents/gal FOB USG, with offers at 296 cents/gal FOB USG. The nearly 10-cent jump in benzene prices has added nearly a penny to styrene variable costs, pushing offers closer to 48 cents/lb. Styrene buyers, though, have been heard to bid between 45 and 46 cents/lb.
Also making exporting US product difficult was the timing of the deliveries. Since most producers are sold out of August material in the US,traders hoping to fill an open arb were looking at an end of September or early October arrival, a source said.
"All the market [in Europe] is FOB and you only have September material in the US," a trading source said. "So you need to look at [the] October market in Europe."
There were no price indications for October styrene in Europe on Tuesday, giving traders no guidance for a potential arbitrage opportunity from the US in September. Variable costs for styrene production in the US in September also could climb, with September spot benzene at a 3- to 5-cent premium to August spot benzene.
The increased costs made it difficult for traders to fill a potential arbitrage opportunity to Europe.
Several styrene deals were done in Europe near $1,100/mt FOB R'dam for September on Tuesday. After adding on $55 to cover freight and other costs,the US price would have to be near 47 cents/lb to profitably ship USG styrene to Europe.
Late last week US styrene producers offered cargoes at 47 cents/lb FOB USG. At that time, the US benzene price was near 283 cents/lb. Since then,bids for August benzene have climbed to 288 cents/gal FOB USG, with offers at 296 cents/gal FOB USG. The nearly 10-cent jump in benzene prices has added nearly a penny to styrene variable costs, pushing offers closer to 48 cents/lb. Styrene buyers, though, have been heard to bid between 45 and 46 cents/lb.
Also making exporting US product difficult was the timing of the deliveries. Since most producers are sold out of August material in the US,traders hoping to fill an open arb were looking at an end of September or early October arrival, a source said.
"All the market [in Europe] is FOB and you only have September material in the US," a trading source said. "So you need to look at [the] October market in Europe."
There were no price indications for October styrene in Europe on Tuesday, giving traders no guidance for a potential arbitrage opportunity from the US in September. Variable costs for styrene production in the US in September also could climb, with September spot benzene at a 3- to 5-cent premium to August spot benzene.
