Forecasts point to a steady to somewhat bullish trend, but it remains to be seen whether styrene markets will be able to reverse course in March. Styrofoam suppliers expect prices to follow the upward trend of upstream markets, while buyers are hesitant about cost-driven price increases.
According to Iran Petrochemical News Agency (IPNA), cash prices of polystyrene decreased by 50 to 70 euros per ton in February. Traders are currently debating whether polystyrene markets will reverse course in March amid rising energy costs and an uncertain supply and demand outlook.
The rising trend of oil prices following Russia’s invasion of Ukraine
Russia’s all-out invasion of Ukraine has rattled energy markets, further increasing the risk of supply disruptions. Camorbis data showed that the spot prices of Nafta Europe in the week of February 28 crossed the mark of $900 per ton (CIF Northwest Europe).
Styrene March bullish predictions
Since the upward trend of the upstream markets has a cascading effect on the downstream prices, traders have prepared themselves for the upward trend in the price caused by the increase in costs. It is expected that the rising price of crude oil and naphtha will pave the way for the rising trend of ethylene, benzene and styrene in March.
Styrene spot prices have been hovering around their recent levels for the past few weeks. However, FOB Northwest European cash prices have risen by around $100/t since late January. This, along with the potential upward trend of monthly ethylene and benzene contracts, will probably result in an upward trend in styrene. Forecasts for now are a mild increase in prices.
Cost increases are likely to offset weak market dynamics
Forecasts point to a steady to somewhat bullish trend, but it remains to be seen whether styrene markets will be able to reverse course in March. Styrofoam suppliers expect prices to follow the upward trend of upstream markets, while buyers are hesitant about cost-driven price increases.
Supply levels are likely to have reached equilibrium after the return of European domestic capacities. Although converters report late deliveries, this is mainly due to a shortage of trucks rather than limited availability from manufacturers.
The construction sector has performed better than other sectors, and at the same time, converters in the insulation sector report good orders. Expanded polystyrene has been limited by a lack of sufficient imports of black-gray cargoes of the product and production disruptions, while a number of regional suppliers are not providing additional allocations at the same time as healthy demand for its core applications. However, converters are not so optimistic about continued demand from their customers, as they are aware that rising energy costs could hurt purchasing power.
In the meantime, traders see a drop in market activity. Buyers are also cautious about their purchases due to reduced demand in their end markets as they do not want to renew their inventories to high levels. They pointed to the rise in the costs of municipal services and the intensification of pressure on their activities. “We expect prices to stabilize at the same time as costs rise and demand falls,” said one trader. “Prices were already hovering at their highest levels in several years.”
