24 December 2012 04:33 [Source: ICIS news]
SINGAPORE (ICIS)--Asian styrene monomer (SM) prices have reached a 10 year high this week despite the current lull season.
Spot prices rose to above $1,700/tonne (€1,292/tonne) CFR China on 11 December, surpassing the previous high at $1,670/tonne CFR China in June 2008, according to ICIS data.
The fourth quarter is usually a weak period for SM as demand from the downstream styrenics sector is at its weakest.
However, a tight supply in the Asian SM market has sustained prices since September. SM prices were able to buck the trend of many other petrochemicals and posted gains in the fourth quarter.
Inventory volumes along the shore tanks in eastern China dropped to 35,900 tonnes in late September from around 151,000 tonnes in early February and grew to above 40,000 tonnes in December, but still remained below the usual 50,000-60,000 tonnes average monthly level.
The tight availability in Asia was contributed by low run rates at regional plants because of poor margins, weak downstream demand, as well as limited arbitrage from the US in recent months.
“The tight supply in Asia is likely to continue into the first quarter of next year as regional facilities continue to run at lower rates”, said a Korean trader.
Because of elevated feedstock benzene prices, which rose to above $1,500/tonne FOB Korea in December, SM producers are expected to face persistently weak production margins which will curb their run rates
“The margins of SM makers are very squeezed, hence Japanese makers are expected to run their plants at around 75% on average in 2013”, said a Japanese producer.
Consequently, the market has taken on a bullish tone with prices remaining on an uptrend.
Talks of an economic rebound in China after the emergence of some positive data in November bolstered the market sentiment of SM traders. Demand for styrenics was also heard to have picked up in the second half of November, fuelling speculation that the economic decline in China might have bottomed out.
“Some traders are positioning themselves for a potential rebound in China. While there are some signs of renewed demand for resins, it is still too early to tell”, said a Taiwanese resins producer who buys SM.
Market players generally expect a pick-up in demand for SM after the Lunar New Year in February, barring any unforeseen economic circumstances or escalation in Middle East tensions.
SM is a liquid chemical used to make plastic resins like polystyrene (PS) and acrylonitrile-butadiene-styrene (ABS) as well as synthetic rubbers like styrene-butadiene-rubber (SBR) and styrene-butadiene-latex (SBL).
($1 = €0.76)
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