Styron will seek to increase European polystyrene prices in mid-November by Eur70/mt for "unconcluded" contracts due to the spike in styrene spot prices since the start of November, a company product manager said.
This price increase comes after the company along with all other producers announced a decrease of around Eur15/mt at the start of November, due to a fall in feedstock styrene.
However prompt demand and load port and supply issues in the styrene spot market since then have led to a tight market and driven up 3-30 day spot prices by $161.50/mt to be assessed at a November high of $1,512.50/mt FOB R'dam on November 11.
"We have seen a major acceleration in feedstock [costs]. Our main concern is availability of styrene, which has reduced drastically in the past couple of weeks," the Styron source said.
"As of yesterday a $160/mt has been added to current spot and a significant cost is going to be in place in December and I expect it to move into the December contract."
The source also pointed to producers' inability to maintain margins since the start of the second quarter as a reason to reverse its November price target.
"Only a few contracts have settled so far and thus it is justified in putting it into the negotiations. Margins are completely shot; we feel it's right to pass this through."
However, the Styron source said the company would honor any concluded business at the previously announced November decrease.
"At the beginning of November we did indicate a decrease but styrene was at $1,400/mt and now it is at $1,500/mt, even as high as $1,600/mt. The gap over benzene is almost at $600/mt. It's the highest in 10 years."
The source admitted the company would likely face resistance from converters given that demand for PS was still poor and supplies were still plentiful but said it had seen a pick up in November from a very poor September/October.
"If going with this increase means that we lose demand then this is not going to be an issue."
"Those that can take product will [choose to do so now]. We're now running flat out; all trains are running ant maximum rates. We're chasing it [the increase]."
