FocusAsia SM to stay firm as benzene shortage keeps supply tight

18 September 2012 07:52  [Source: ICIS news]

By Clive Ong

SINGAPORE (ICIS)--Spot styrene monomer prices in Asia may continue to be buoyed in the coming weeks as a shortage of benzene feedstock prevents producers from ramping up production, industry sources said on Tuesday.

On 17 September, SM prices were assessed at the year’s high of around $1,600/tonne (€1,216/tonne) CFR (cost & freight) China, according to ICIS data, up by about 3% from around $1,540-1,550/tonne CFR China last Friday.

Domestic prices in eastern China for prompt parcels also jumped by more than yuan (CNY) 1,000/tonne week on week to CNY12,600/tonne ex-tank on 14 September, as local inventories dwindled.

At shore tanks along east China last week, SM inventory has whittled down to around 53,000 tonnes – about a third of the peak volume recorded in February at 151,000 tonnes, industry sources said.

“The local supply remains tight as SM units are struggling to raise output due to benzene shortage,” said a trader in China.

Run rates at SM plants in China are at around 60-70% over the past month while benzene has been tight for the past two months.

 “Some traders have redirected [SM] cargoes to Europe in recent weeks as prices over there are much higher than Asia,” said a trader in Singapore.

In Europe, SM prices were at $1,750-1,820/tonne FOB (free on board) Rotterdam in the week ended 14 September, compared with $1,485-1,550/tonne CFR China, roughly $200/tonne higher, traders said.

Recent measures announced by the European Central Bank and the US Federal Reserve to address their respective economic troubles, provided further impetus for SM prices to increase.

But some market players said that SM gains in the region may be soon fizzle out given weak fundamentals

“SM prices have rocketed higher but downstream styrenic resins are still performing poorly,” said a Taiwanese resins producer.

The third quarter manufacturing season in China remains weak with consumption of resins lower than previous years.

Weak economic conditions in the US and eurozone have curbed demand for Asian made goods.

SM is a liquid chemical used to make resins like polystyrene (PS), acrylonitrile-butadiene-styrene (ABS) and expandable polystyrene (EPS).

($1 = €0.76)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Clive Ong
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