10 July 2013 06:55 [Source: ICIS news]
By Clive Ong
SINGAPORE (ICIS)--Asia’s styrene monomer (SM) prices recaptured the all-time high as persistently tight availability boosted prices, market sources said on Wednesday.
SM prices were at around $1,790/tonne (€1,396/tonne) CFR (cost & freight) China on 9 July. Prices last reached a record of $1,780-1,800/tonne CFR China in early January this year, according to ICIS data.
Despite the global market sell-off in May and June on the back of the US federal reserve potentially tapering off its bond purchase, SM prices stood up well with prices dipping briefly only once below $1,700/tonne CFR China in late May before resuming its uptrend.
"The tight market is keeping prices up despite poor global economic outlook and weak performance in the downstream styrenic resins sector," said a trader in Singapore.
While some inflow of deep-sea cargoes in late June and July was seen, traders estimated that fewer parcels are expected to arrive in Asia in August.
"The deep-sea parcels in July did not impact the market as most have been committed prior to landing," said a trader in China.
The lack of deep-sea lots for August appeared to be worsening the prevailing market tightness.
Players in Asia were unaffected by talks that additional cargoes from the Middle East could be shipped to the region. They remained largely confident that the tight conditions in Asia could readily absorb these cargoes.
Meanwhile, market attention was also on the restart of Lotte Chemical’s SM plant in Daesan, South Korea this week. The plant was restarted on 10 July after its shutdown because of technical issues.
However, supply is expected to remain constrained as production is still being ramped up.
"It seems that Lotte will still not be able to supply July and August cargoes and perhaps even a portion of September lots," said a South Korean trader.
Buying momentum remained strong with trades done mostly for August and September parcels this week.
On the other hand, performance in the downstream styrenic resins sector remained mostly tepid despite the start of the third-quarter manufacturing season.
"There is limited pick-up in demand for resins so far, which is unlike other years where buying interest will increase in July," said a resins trader in Hong Kong.
Despite the lacklustre demand in the downstream sector and widening spread from feedstock benzene values, SM prices appeared poised for more gains in the near term as supply is expected to remain snug.
Escalating tensions in the Middle East were touted as one reason for a potential disruption to petrochemical supply while talk of an outage at an SM facility in Europe this week continued to raise concerns of a supply crunch in the Asian SM market.
SM is a liquid chemical used to make resins such as PS and ABS as well as synthetic rubbers including styrene-butadiene-rubber (SBR) and styrene-butadiene-latex (SBL).
($1 = €0.78)
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