FocusCorrected: Iran SM adds to massive deep-sea cargoes bound for China

03 November 2010 06:55  [Source: ICIS news]

Correction: In the ICIS news story headlined “Iran SM adds to massive deep-sea cargoes bound for China” dated 3 November 2010, please read in the fourth paragraph … a CNY550/tonne decrease from 21st October … instead of  … a CNY550/tonne increase …. A corrected story follows.

By Keny Jin

SINGAPORE (ICIS)--China will receive around 30,000 tonnes of styrene monomer (SM) from Iran in December, adding to the strong flows of deep-sea cargoes that continue to augment the Asian country’s inventory and upset SM prices, industry sources said on Wednesday.

Some traders had expressed concerns that inventory levels in east China market will blow up to hit 100,000 tonnes by the end of the year.

Actual inventory was pegged at around 75,000-80,000 tonnes this week, much higher than the usual level of 60,000-70,000 tonne in off-season, market sources said.

The SM price in east China trended lower in the past two weeks, from yuan (CNY) 10,200/tonne ($1,527/tonnes) to CNY 9,650/tonne ex-tank Zhangjiagang, a CNY550/tonne decrease from 21st October.

Buying activities were limited, according to traders, as most of them were waiting on the sidelines given the surplus supply that was weighing on prices.

Iran’s SM shipment was precipitated by the restart of Pars Petrochemical Co’s 600,000 tonne/year plant in Assaluyeh at the end of October.

The plant was shut on 20 August due to lack of feedstock benzene as a result of sanctions on Iran due to its nuclear arms programme.

Pars Petrochemical's Chinese clients Sinochem, SK Networks and Nantong Chemical and Light had received notice that supply would resume next month.

Pars Petrochemical is a branch of Iran’s Petrochemical Commercial Company (PCC).

Meanwhile, some 100,000 tonnes of material were heading towards northeast Asia, including China, from the US between October 2010 to January 2011, market sources said.

The strong supply of imported SM, however, was not being matched by demand, given seasonal weakness in production of major downstream expandable polystyrene (EPS) in China, they said.

EPS producers were expected to further cut operating rates at the plant by to just 50% in the last two months of the year. Currently, the plants were running at between 60-65% of capacity, industry sources said.

EPS accounts for about a third of China’s total SM demand, based on data from Chemease CBI China. CBI China is a joint venture with Reed Business Information, which owns ICIS and is part of the Reed Elsevier Group.

($1 = CNY6.68)

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By: Keny Jin

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