Asia SM prices drop below $1,000/tonne again on ample supply

Author: Trixie Yap

2018/12/11

SINGAPORE (ICIS)--Asia styrene monomer (SM) prices have fallen below $1,000/tonne CFR (cost and freight) China again on the back of ample supply for December and January parcels, even though demand from downstream seemed stable, market participants said on Tuesday.

Discussions for January were mostly at $990-1,000/tonne CFR China, while December talks were limited as few importers were keen to procure such prompt cargoes.

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Sellers were pursuing deals more urgently than before in the late morning and early afternoon local time, after the emergence of poor macroeconomic indicators such as decreases in futures prices and weaker stock market performance.

A myriad of offers and selling interest emerged for both ADD and non-ADD product for January delivery.

This was against a backdrop of an open arbitrage window for Europe-origin exports and mostly stable run rates of SM units expected within Asia until January.

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Demand was stable, with enquiries from some traders emerging, on expectations that the market had already bottomed out, and need by some to replenish their inventories. Offtaking activities from downstream PS markets were still healthy amid workable production spreads.

Workable margins for back-to-back business activity, with import parity prices still higher than ex-tank prices in China for end-January delivery, made it possible for CFR China demand to emerge as well.

However, supply still outpaced demand as importers were not yet at the stage of taking on long positions.

"Most people are just buying and selling back to back because of market volatility, if inventories rise further [in] east China, there is a likelihood that the market could continue the downturn," one trader said.