Asian styrene prices hit a 10-year record high

Although it is in the off-season, this week Asian styrene (SM) prices hit a 10-year high.

Data show that on December 11, the spot price rose to 1,700 US dollars / ton (1,292 euros / ton) CFR over China, exceeding the previous high of 1,670 US dollars / ton in June 2008.

Since the demand for styrene-based plastics from the downstream was the weakest in the fourth quarter, the fourth quarter was usually the off-season for SM. However, since September, Asian SM supply has been supporting prices. In the fourth quarter, unlike many other petrochemical products, the price of SM increased.

Coastal inventories in East China fell from 151,000 tons at the beginning of February to 35,900 tons at the end of September, and increased to more than 40,000 tons in December, but it was still lower than the monthly average of 50,000-60,000 tons.

Due to thin profits, weak downstream demand coupled with limited arbitrage in the United States in recent months, the low equipment operation has led to tight supply in Asia.

A South Korean trader said: "Since the installation continues to operate at a low level, supply shortages in Asia may continue into the first quarter of next year."

The price of raw materials** in December rose to US$1,500/ton FOB in South Korea. SM producers expect production profits to remain slim and plant operating rates to be limited.

A Japanese manufacturer said: "SM manufacturers' profits have been significantly reduced, so Japanese manufacturers expect the average operating rate of the plant in 2013 to be around 75%."

Market participants are generally bullish and prices are still rising.

China’s economic data in November was optimistic and there was a rebound in the economy, supporting the market sentiment of SM traders. In addition, it was heard that the demand for styrene plastics increased in the second half of November and stimulated speculation, and the Chinese economic downturn may have bottomed out.

A Taiwanese SM buyer stated: “Some traders believe that Chinese prices may rebound. Even though demand has increased, it is still too early to talk about price increases.”

Market participants generally expect that demand for SM will increase after the Lunar New Year in February unless there are unforeseen economic conditions or tensions in the Middle East.