European styrene backwardation narrows following Maasvlakte production issue

London — The backwardation between August and September in the European styrene market has narrowed this week following a production issue in the market.

August was assessed at $19/mt above September on Thursday, narrowing significantly from $38.50/mt a week earlier as September prices climbed faster than August.No further news was available regarding the production issue at LyondellBasell and Covestro's jointly owned Maasvlakte propylene oxide/styrene monomer facility. Covestro declared force majeure on supplies from the unit in early August.

Uncertainty on availability from the unit led to firmer September prices on the week as the market factored in the possibility of the issue continuing into next month.

September prices rose this week despite the arrival of imports from the US. A trader source said Friday that these were structural volumes, rather than additional volumes to cover for the outage.

More volumes are expected to arrive from the US and the Middle East in September, but this is doing little to keep September prices down.

The hike in September prices and the narrowing of the August-September backwardation have led to bullish expectations for the September contract price.

"The September contract price settlement will depend on Maasvlakte," the trader source said.