European Styrene Contracts Settle with an Increase After Months of Bearish Rally

Hamburg, Germany: After three months of a consistent decline, Styrene prices in Europe have increased in the first assessment of Q4 2022. Market participants have reported a rise in Styrene prices for the October contracts. However, the price change has been termed a mild increase, signifying the reversal of fortunes in the coming months.

During the third quarter, Styrene monomer prices declined sharply for three months straight on the back of a nosedive in the upstream Benzene prices in the European market. Styrene monomer prices in Germany deteriorated by more than 25% during the recently concluded quarter.

As per several market participants, Styrene contracts have been negotiated with an increase of Euro 50 per MT.

The decline in upstream Benzene prices coupled with low demand for Styrene-based polymers and plastics culminated in a significant drop in Styrene prices. Polystyrene and Acrylonitrile Butadiene Styrene (ABS) have observed a stable to weak demand as the European market has been under a tight grip of inflation, weakening the consumer sentiment. This, in turn, has impacted the demand dynamics of the automotive and construction industry, forming the key consumption industries for ABS and Polystyrene.

Natural gas prices have been a cause of concern since the beginning of the Ukrainian crisis, and Europe has still been battling high LNG prices. The sharp increase in LNG prices has bolstered electricity prices, thus sharply increasing the overall cost of production. Rising production costs amid weak demand have prompted Styrene manufacturers to drop operating rates. Meanwhile, Styrene imports from the Asia Pacific and North American region countered Europe's decline in production rates amid energy crises.

As per ChemAnalyst, "the optimistic change in Styrene prices is expected to shift the balance in coming  months as demand, traditionally, slumps towards the second half of Q4 2022."