US styrene prices are likely to remain weak in the near term on the back of softer feedstocks and weak derivative demand, sources told Platts Wednesday. Spot styrene prices were talked notionally near 57 cents/lb FOB USG Wednesday morning amid thin trade activity.
"It's going to be below 57 cents," said one trader.
Participants pointed to weakness in feedstock ethylene and benzene as drivers behind the expectation of lower styrene values. Spot ethylene began to fall in the beginning of September, dropping from 63.50 cents/lb to as low as 46.75 cents/lb on October 5. Since that time, the price has bounced back slightly and was last assessed at 49.25 cents/lb.
Some thought ethylene prices would move higher as rising ethane has cut into producer margins, and steam cracker margins from ethane were at their lowest level in 2011 at just over 9 cents/lb.
Still, any increase in ethylene could be offset by benzene, which was talked Wednesday at 313-323 cents/gallon DDP USG for October. Benzene accounts for roughly 70% of the feedstock for styrene while ethylene accounts for the remaining 30%.
Adding to the downward pressure on styrene was weak demand from downstream polystyrene. Sources in the polystyrene market anticipated that prices would fall on the back of lower Asian offers, which were at a 5-8 cents/lb discount to US prices.
Since mid-September, styrene prices in the US have fallen roughly 7.5 cents/lb and were last assessed at 57.15 cents/lb FOB USG.
