29 August 2011 00:00 [Source: ICB]
High prices helped by plant closures as demand stays low after China's stimulus last year
Tight supply of styrene in Asia because of multiple plant shutdowns is supporting high prices despite weak demand in the region, according to traders.
Spot prices were hovering in the low $1,500s/tonne (€1,035/tonne) CFR (cost & freight) China in mid-August. Styrene demand this year has been affected by the eurozone debt crisis and economic woes in the US.
Vince Sinclair, director, styrenics & phenol, Asia, at global consultancy CMAI, agreed that the styrenics sector is struggling. He said demand for styrene has been below par since about May after a decent four to five months. He expects growth for the Asian styrene market overall this year may end up no more than 2%, or less if there is a double-dip recession.
"Part of this year's demand was borrowed last year while we had the hyper-stimulated appliance and automotive markets.
"The latter are struggling as they are well supplied with weaker demand, and demand for polymers for durables is depressed by slower production of finished goods," Sinclair said.
Although styrene is making money for the first time this year because supply has been cut more than demand, the industry will respond with higher production and turn a snug situation into an oversupplied one towards the end of the year, Sinclair predicted.
He warned this could happen sooner if the industry does not get a glimmer of better downstream demand in September/October for the peak manufacturing season.
In Taiwan, Formosa Chemical & Fibre's 200,000 tonne/year No. 1 and 300,000 tonne/year No. 2 lines have been shut since May after a fire at its cracker in Mailiao. Taiwan Styrene Monomer's 180,000 tonne/year No. 1 line in Lin Yuan has been closed from late July because of mechanical woes. In China, Shanghai SECCO Petrochemical shut its 500,000 tonne/year plant in Shanghai in early August for maintenance.
In Singapore, Seraya Chemical shut its 330,000 tonne/year unit for maintenance in August, market sources said.
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
Sample issue >>
My Account/Renew >>
Register for online access >>
|ICIS Top 100 Chemical Companies|
|Download the listing here >>|
Asian Chemical Connections