Falling European styrene monomer values have crunched producer margins
and kept the benzene-styrene spread near $200/mt, sources told Platts Friday.
Styrene values have fallen just under $125/mt since the beginning of the
month on improved supply and declining feedstock values, with pricing talked
at $1,030-1,050/mt FOB Rotterdam at time of publication. With NWE benzene
values last assessed at $838/mt CIF ARA and ethylene assessed Thursday at
Eur940/mt, estimated production costs were approximately $926.64/mt.
Adding $90-120/mt for variable costs, producers were looking at costs of
at least $1,016.64/mt. At best that meant margins of roughly $33.36/mt while
at worst, makers would just break even.
Participants in the SM market said however that, if margins fell too low,
producers would be likely to cut rates which in turn would tighten the market
and bolster the price. Additionally one source noted that integrated producers
did not necessarily need huge margins from benzene.
"If a company makes enough margin from oil and naphtha, they could afford
to take smaller margins from benzene and styrene," the source said. "But they
prefer a larger benzene to styrene spread," he added.
The NWE benzene-styrene spread was currently $212/mt assuming benzene at
$838/mt and styrene at $1,050/mt. That number was up from last week, when the
spread was just below $175/mt however was still considered too low.
"They prefer as big a spread as possible," said one source.
and kept the benzene-styrene spread near $200/mt, sources told Platts Friday.
Styrene values have fallen just under $125/mt since the beginning of the
month on improved supply and declining feedstock values, with pricing talked
at $1,030-1,050/mt FOB Rotterdam at time of publication. With NWE benzene
values last assessed at $838/mt CIF ARA and ethylene assessed Thursday at
Eur940/mt, estimated production costs were approximately $926.64/mt.
Adding $90-120/mt for variable costs, producers were looking at costs of
at least $1,016.64/mt. At best that meant margins of roughly $33.36/mt while
at worst, makers would just break even.
Participants in the SM market said however that, if margins fell too low,
producers would be likely to cut rates which in turn would tighten the market
and bolster the price. Additionally one source noted that integrated producers
did not necessarily need huge margins from benzene.
"If a company makes enough margin from oil and naphtha, they could afford
to take smaller margins from benzene and styrene," the source said. "But they
prefer a larger benzene to styrene spread," he added.
The NWE benzene-styrene spread was currently $212/mt assuming benzene at
$838/mt and styrene at $1,050/mt. That number was up from last week, when the
spread was just below $175/mt however was still considered too low.
"They prefer as big a spread as possible," said one source.
