ICIS recently launched the latest version of the China SM Annual Study, which covers the latest market developments, hot topics, supply and demand balance, along with a forecast of the domestic SM market in 2016. The Chinese SM market continues to present volatile conditions: tightened downstream processors’ margins, weak downstream demand and reduced import cargoes. What does this mean for international market players in the SM landscape?
To give you a glimpse of the type of valuable information provided in the annual study, we have made the market overview of the study available for you to view.
There were dramatic fluctuations in SM prices in 2015. The prices were bullish in the first half of 2015 on the back of low inventories, which were assisted by a slump in import volume amid mass unit turnarounds in Asia in the second quarter.
Those factors dropped inventory levels at domestic ports despite deep-sea arrivals from the US. However, weak downstream demand triggered by an expectation of slower GDP growth and the sluggish real estate market gradually took effect on the SM market in the second half of the year, preventing price increases. SM producers were enjoying higher margins on the back of a huge price spread between SM and benzene.
However, a rapid increase in SM prices squeezed downstream processors’ margins and weighed down on end-users’ buying interest. On front of supply, the increase in import volume will be limited in 2016 despite fewer turnarounds at South Korea’s SM plants, because Japan decided to close two plants with a combined capacity at 740,000 tonnes in 2015 and 2016. In the meantime, more domestic producers will implement maintenance plans in 2016, but there will be 660,000 tonnes of new capacity released by then.
To sum up, the domestic supply will grow in the following year, but the growth will be limited. New capacity of 380,000 tonnes, belong to Shandong Shengyuan Chemical, Shandong Yuhuang and CNOOC Dongfang Petrochemicals, has been on stream in 2015, located at Shandong and Hainan. In 2016, three SM plants with combined capacity at 660,000 tonnes are expected to come on stream, distributing at Jiangsu, Zhejiang and Shandong. As such, the main capacity expansions in 2015 and 2016 are found in east China, which is the nation’s main consumer. Around 51% of demand was covered by import cargoes in east China in 2014, while in January-August 2015, the dependency on imports decreased in both east and south China as a result of unit commissioning in the two regions.
The demand increase for SM will be limited in 2016, and there are no expansion projects heard in the derivative markets. However, with the 660,000 tonnes of capacity and additional output at 245,000 tonnes being released in east China in 2016, dependency on import cargoes may be reduced by then.
As for south China, import volume will be almost stable in view of largely unchanged demand.
ICIS China SM Annual Study offers an extensive look into the latest developments, hot topics and future trends in China’s dynamic SM industry. This must-have resource also provides a comprehensive view of supply and demand for 2016, giving you all of the following:
Key topics covered:
The new ICIS Supply and Demand Window offers an 11-year view on supply & demand and trade flows across 61 petrochemical markets. Through revealing producers’ manufacturing capabilities, the Supply and Demand Window provides an informed view of trade patterns to support your strategic plans, budgets and forecasts.Enquire about Supply and Demand services