Continued strength in the US ethylene market on Monday kept variable costs for styrene production well above the level needed to profitably export to Europe and Asia.
December ethylene was bid at 49 cents/lb Mtb-Wms on Monday, with offers at 53 cents/lb Mtb-Wms. With benzene prices near 321 cents/gal FOB USG, variable costs for styrene production were estimated near 52.75 cents/lb. Assuming 3 to 5 cents to cover fixed costs and profit, producers were notionally offering between 56 and 57 cents/lb.
With European styrene priced near $1,210/mt and Asian styrene priced near $1,240/mt, the US price would have to fall to 53 cents/lb FOB USG to profitably export material out of the US.
The US ethylene market was backwardated on Monday, with January bid at 45 cents/lb and Q1 bid at 42 cents/lb. If benzene prices stay unchanged, ethylene would have to fall to near 40 cents/lb to drop variable styrene costs to a level where US styrene could be exported to Europe and Asia.
Benzene prices, though, were likely to fall, a source said. "I don't think I'd pay 316 [cents/gal] for benzene today," the source said.
If benzene prices fall to 315 cents/lb and ethylene prices fall to the low 40s cents/lb, variable costs for styrene production in the US would be near 49 cents/lb -- leaving 4 cents for producers to cover variable costs and margin, while allowing for profitable exports to Europe and Asia.
December ethylene was bid at 49 cents/lb Mtb-Wms on Monday, with offers at 53 cents/lb Mtb-Wms. With benzene prices near 321 cents/gal FOB USG, variable costs for styrene production were estimated near 52.75 cents/lb. Assuming 3 to 5 cents to cover fixed costs and profit, producers were notionally offering between 56 and 57 cents/lb.
With European styrene priced near $1,210/mt and Asian styrene priced near $1,240/mt, the US price would have to fall to 53 cents/lb FOB USG to profitably export material out of the US.
The US ethylene market was backwardated on Monday, with January bid at 45 cents/lb and Q1 bid at 42 cents/lb. If benzene prices stay unchanged, ethylene would have to fall to near 40 cents/lb to drop variable styrene costs to a level where US styrene could be exported to Europe and Asia.
Benzene prices, though, were likely to fall, a source said. "I don't think I'd pay 316 [cents/gal] for benzene today," the source said.
If benzene prices fall to 315 cents/lb and ethylene prices fall to the low 40s cents/lb, variable costs for styrene production in the US would be near 49 cents/lb -- leaving 4 cents for producers to cover variable costs and margin, while allowing for profitable exports to Europe and Asia.
