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As of Monday, an initial European styrene monomer contract for November was settled at €813/ton on FD NWE basis between BASF and Synthomer, which was €16/ton lower from October. The decrease came despite a €42/ton increase in November benzene contracts, which were settled at €547/ton FD NWE, as well as firm crude oil prices, which have bounced back to $78.13/barrel on Monday, gaining $1.13/barrel after plunging to $77/barrel. Given these factors, the downside move of the styrene monomer contracts was mainly attributed to the weak performance of derivative markets, where demand is expected to weaken further due to the approaching year end lull.
Following the lower settlement of the November styrene contract, the PS market has started to show the first responses in Italy. According to market sources, BASF announced that they will lower their PS gross market contract prices for the month of November. The company will seek €10/ton (around $15/ton with the recent parity of 1.47) decreases on their PS contracts effective from November 1, 2009.
The announcement from the producer was in parallel with players' expectations in Italy. Considering the fact that there is little chance for end product markets to revive due to the low season in the winter months, players in Italy's PS market were mostly expecting prices to soften this month, believing that depressed demand and lower spot styrene costs would overshadow the gains of the energy markets, thereby forcing PS sellers to concede to modest decreases in November. Buy ideas reported for West and Central European PS are currently standing between €950-980/ton FD North Italy, 90 days deferred payment terms. A buyer reported this week that he expects to see decreases of €30/ton even though sellers are trying to hold the market, while another converter said he is seeking stable to slightly lower prices this month.
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In the spot market, market sources reported that styrene prices are heard at around the level of $980/ton FOB NWE, whereas prices were as high as $1120/ton in early October, which represents almost a $140/ton (€95/ton) decrease in a month based on plunging benzene prices combined with poor buy interest.
Sentiment in Turkey, where players are waiting to hear November offers from regular European PS suppliers, is also expected to be affected by the lower styrene contracts in Europe as the euro/USD parity, which remains firm slightly above 1.47, after reaching 1.50 in the previous week, continues hurting the competitiveness of euro based offers.
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