12 March 2012 00:00 [Source: ICB]
Short-term supply issues have seen Asia styrene prices breach $1,500/tonne for the first time since July 2011.
Spot styrene was reported at an average of $1,470-1,515/tonne CFR (cost and freight) China in the week ending March 2, marking a $20-35/tonne increase on the previous week's range. This is the highest price seen for six months.
Traders said that a period of maintenance shutdowns in March and April, as well as limited US-Asia arbitrage shipments, will stretch availability in the region and support higher prices.
Japan's Asahi Kasei and Idemitsu Kosan and South Korea's Samsung Total Petrochemicals are planning maintenance at their styrene plants this month and next, which is fueling the price rise. With Chinese factories typically ramping up production of finished goods from April, buying interest from the downstream styrenic resins sector is expected to strengthen, added market observers. Styrene demand started to improve during the first half of February after the Lunar New Year holidays.
There is, however, an air of caution in the market, with some traders wary of a possible price correction given the sharp increase within a fortnight. Spot values have gained $30-60/tonne CFR China in two weeks.
"The improvement in the downstream sector has been modest, hence prices could recede," said a trader.
Others, however, believe that prices have further upside potential as US crude futures remain high at around $107/bbl. Benzene also remains strong, with prices above $1,200/tonne FOB (free on board) Korea.
"With costs at these levels, styrene margins are still thin and sellers are still trying to reach higher prices," said another trader.
In Europe, meanwhile, styrene numbers stabilized in February, recouping some of the margin with benzene that was lost in the first quarter.
Benzene prices had been escalating while styrene struggled because of weak demand.
European players are expecting the domestic market to tighten because of the turnarounds in Asia and the subsequent diversion of US imports to the region.
In the week ending March 2, spot styrene was reported at $1,565-1,575/tonne FOB (free on board) Rotterdam.
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