Price and market trends: Deep-sea inflows to boost Asia SM supply; prices may fall

10 May 2013 09:42  [Source: ICB]

Asia will receive huge volumes of deep-sea styrene monomer (SM) cargoes by the middle of the year, easing tight supply in the region that has been supporting prices since the start of the year, traders said on 1 May.

Arbitrage volumes estimated at around 50,000 tonnes from the US are expected to reach Asia in June and July, when regional demand typically weakens, they said. "While availability in Asia has been rather tight over the past several months, deep-sea arrivals could start to have a downward impact on prices in the near term," said an SM user in Taiwan.

SM PRICES

SM prices have been trading at a range of $1,635-1,790 (€1,243-1,360/tonne) CFR China/tonne CFR (cost and freight) China levels since the start of the year, according to ICIS data.

On 1 May Asian prices were higher than the US market's 71-72 cents/lb, which is around $1,565-1,587/tonne.

Asia SM

Shore tank inventories of spot SM in Asia have mostly fluctuated between 50,000-90,000 tonnes this year, lower than the stocks in the same period last year at more than 100,000 tonnes, they said.

The availability of spot cargoes has been scarce, particularly in the past three months because of scheduled turnarounds at regional facilities, traders said. Those SM plants in operation, on the other hand, have been running at reduced rates in view of weak demand for downstream styrenic resins since the fourth quarter of 2012, industry sources said.

Some producers in Asia are keeping output at 85-90% this year compared with 90-100% in previous years. "Demand for resins is still relatively weak and producers are generally keeping lower output," said a Japanese SM maker.

The tight supply in the region has been preventing prices from falling significantly, notwithstanding weak demand, industry sources said.

SAUDI ARABIAN OUTAGE

In April, SM prices were relatively stable at above $1,650/tonne, ICIS data showed. An outage at SABIC's 500,000 tonne/year SM unit in Saudi Arabia since the second half of March aggravated the scarcity of spot cargoes flowing into Asia. The facility is expected to resume operations in the first half of May, industry sources said. "If SABIC restarts as planned, then [its] supply to Asia will likely resume by the second half of May," said an SM buyer in northeast Asia.

By the middle of the year, SM facilities in Asia will have also completed their scheduled turnarounds.


By: Clive Ong
+65 6780 4359



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