Price and market trends: China styrene capacity build-up drives Asia closures

07 March 2014 10:50 Source:ICIS Chemical Business

By 2015, the country’s total styrene capacity is projected to reach 8.43m tonnes/year, about a 50% increase from 2010

China’s strong build-up of styrene monomer (SM) capacity over the years has been the driving force in the ongoing regional petrochemical sector rationalisation, whereby older production facilities are being retired, sources said.

By 2015, the country’s total SM capacity is projected to reach 8.43m tonnes/year, about a 50% increase from 2010, according to Chemease, an ICIS service in China. Over a four-year period to 2010, SM capacity in the country more than doubled to 5.61m tonnes/year, the data showed.

China has been steadily building up petrochemical capacity with an aim towards self-sufficiency, given its humongous requirements. The country is the world’s second biggest economy and remains the largest petrochemical importer in Asia.

With the strong growth in domestic capacity, China is less reliant on import cargoes, but its consumption continues to grow, industry sources said.

SM is a liquid chemical used to make resins such as polystyrene (PS), expanded PS (EPS) and acrylonitrile-butadiene-styrene (ABS), as well as synthetic rubbers such as styrene-butadiene-rubbers (SBR) and styrene-butadiene-latex (SBL).

CAPACITY OUTSIDE CHINA
SM capacity growth in Asia has stalled, with producers mothballing plants, fearing the loss of China as a major buyer.

In Japan, two producers have announced the impending facilities closures. Nihon Oxirane will shut down its 425,000 tonne/year SM plant in Chiba by May 2015, while Asahi Kasei Chemicals has announced that its 320,000 tonne/year unit in Mizushima will cease operations in March 2016.

“A deterioration in the supply-demand balance is expected, as the expansion and construction of large-scale plants in Asia are planned,” according to Asahi Kasei, which will keep its other 390,000 tonne/year plant to exclusively cater to the Japanese domestic market.

China’s capacity growth is being supported by demand, given the strong expansion in the downstream styrenics sector in recent years. The rest of Asia provides a stark contrast, with PS and EPS plants either having to scale down or completely shut production.

“PS and EPS expansions are mostly in China as the key users are mostly there. The trend will likely continue into the foreseeable future,” a southeast Asia-based PS maker said.

By Clive Ong