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Platts Snapshot


EU polystyrene buyers grapple with higher CPs, logistical issues in September

With Yuriko Kato, senior petrochemicals pricing specialist

September 19, 2017 12:30:14 EST (3:22)

Following a surge in global styrene prices in late August, polystyrene buyers face a large increase in polystyrene contract prices in September. Yuriko Kato, S&P Global Platts senior petrochemicals pricing specialist, looks at the reasons for the price increase, the divergence in contract and spot polystyrene prices, as well as what the market holds for October.

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Video Transcript


Welcome to The Snapshot – our series which examines the forces shaping and driving global commodities markets today.
Styrene has been one of the most volatile markets in the petrochemicals industry this year, troubled by the many unplanned production outages across the world.


Most recently, Hurricane Harvey’s devastating damage extended to the petrochemicals industry, causing chaos to production and logistics for styrene. Teamed with an unplanned outage in Europe, global styrene prices soared to six-month highs in the second half of August.


This caused particular stress to the downstream polystyrene market, where movement in styrene is the main driver of prices. Contractual buyers are facing a hefty price increase in September following a sharp rise of Eur190/mt or 16% in the styrene contract price in September.


Polystyrene producers have pushed for price increases to cover costs, matching or exceeding the monthly rise in styrene.
Polystyrene demand typically picks up in September as downstream operations resume fully after the summer vacation and key end-use sectors, such as construction and packaging, are in full swing.


Adding salt to the wound, polystyrene buyers in Southern Europe have faced logistical issues due to works on key railway routes connecting Northwestern and Southern Europe. Northwest Europe is a major hub for polystyrene production, while buyers are scattered all around Europe. This has led to buyers grappling to secure volumes as they faced cancellations and a near doubling in freight costs.


The steep increase in the styrene contract price in September has mainly affected large polystyrene buyers who buy most of their volumes on contract as they require a steady flow of product. Smaller buyers, who can minimize contractual volumes and rely on spot purchases, have been mostly shielded from the monthly price rise seen in September.


A large divergence has emerged in polystyrene contract and spot prices in September, with contract currently trending at a significant premium to spot. This is because the market anticipated styrene spot prices to decrease from highs in late-August as the rally was driven by temporary events. A fall in styrene spot typically leads to lower polystyrene spot prices.


And what next for the market in October? The market is anticipating a decline in the styrene contract price as European spot prices have spiralled downwards in the first half of September.


However, several styrene units in Europe are expected to have planned maintenance in the next few weeks and concerns linger over delays in US cargoes arriving into Europe in early October, which could provide an upside in prices. What the styrenics market has learnt this year is that the unpredictable is what often turns to reality.


Until next time on the Snapshot—we’ll be keeping an eye on the markets.





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