19 June 2013 10:13 [Source: ICIS news]
SINGAPORE (ICIS)--Asia’s styrene monomer (SM) prices staged a strong performance in early week with prices surging past $1,750/tonne (€1,313/tonne) because of tight availability and speculative play, although the market lost some gains in mid-week.
Trade centred on July cargoes with some deals seen as well for August parcels. Talk of a potential delay in the restart of a South Korean facility in the weekend of 23-24 June helped fuel the rally early week. Two facilities in Taiwan are also scheduled for maintenance in August, prompting talk that supply could remain constrained in the near term.
“The market has lost maybe $20 since Monday [17 June] but remains above $1,700/tonne CFR [cost & freight] China,” said a South Korean trader.
With the downstream styrenics sector headed towards the third-quarter manufacturing season, sellers of SM anticipate some improvement in demand for July and August parcels.
“The manufacturing season might be weaker than previous years due to weakness in the US and eurozone economies but there should still be some pick-up in demand for resins and SM,” said a trader in Singapore.
With deep-sea lots flowing into Asia in late June and July, trader estimated that there could be less deep-sea parcels fixed for arrival in August.
“We heard less fixtures for August deep-sea [cargoes] so far, and that could keep supply here snug,” said a trader in China.
However, some participants have sounded caution with regard to the elevated SM prices.
Most notably being the wide price spread between SM and feedstock benzene. With benzene prices trading below $1,300/tonne FOB (free on board) Korea, the premium of SM over benzene is in excess of $450/tonne.
“The usual spread for SM over benzene is less than $300/tonne so there is probably some room for SM to retreat once the supply tightness abates,” said an SM buyer in China.
Others pointed to the struggling styrenic resins sector where demand continued to stay weak despite the approach of third quarter manufacturing season.
“The high SM prices is crimping demand for styrenic resins as plastic prices are priced high to reflect the high SM costs,” said a resin producer in Taiwan.
SM is a liquid chemical used in the manufacturing of resins like PS and acrylonitrile-butadiene-styrene (ABS) as well as synthetic rubbers like styrene-butadiene-rubber (SBR) and styrene-butadiene-latex (SBL).
($1 = €0.75)
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