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Feature: European styrene market calm despite heavy turnaround season

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Feature: European styrene market calm despite heavy turnaround season

London — The European styrene market is poised for a heavy turnaround season to begin in the second quarter of the year, according to market sources.

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One trader noted that the global styrene turnaround schedule was the biggest for several years. Despite this work, the market remains relatively calm, with sources pointing to high European stocks.

Market participants were said to be prepared for the turnarounds and initial price increases had already been factored in.

The market was heard storing volumes in the fourth quarter of 2018, when tank storage was $10/mt. Prices have since risen to $15/mt, suggesting greater demand for tank space. Styrene demand has been soft so far over the first quarter.

"The demand is not good for the first quarter, which is why the market is in contango," a source said in relation to the March-April $15-$25/mt contango.

The European market continues to be supplied by US volumes, which market participants noted were structural imports.

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A European trader closely monitoring the Asian styrene market noted the arbitrage to Asia remains closed amid lower prices coupled with high Chinese inventory levels.

According to market sources, styrene stocks in East China stood at 410,000 mt Monday, up 10,000 mt on the week, with arrivals of 26,000 mt outstripping consumption of 16,000 mt. The current inventory level is 280,000 mt higher than at the same date a year ago. As a result, Asian prices have softened despite several plants undergoing maintenance.

Downstream, demand from polystyrene and acrylonitrile-butadiene-styrene may lend support to the styrene market. Polystyrene demand in the first two months of the year had been very strong as buyers secured volumes ahead of anticipated increases in feedstock costs and styrene plant turnarounds.

However, another trader noted that ABS demand remains weak.

"The ABS market has been quite stagnant; I do not see the same consumption as in the past," the trader said. "Car manufacturing has slumped." S&P Global Platts assessed styrene for loading five-30 days forward Tuesday at $1,060.50/mt FOB ARA, up $7 from Monday.

-- Olu Shaw, olu.shaw@spglobal.com

-- Edited by Richard Rubin, richard.rubin@spglobal.com