Supply of South Korean styrene monomer is likely to tighten in 2016 in the wake of lower imports from Japan and increasing demand from downstream startups, market sources said this week.
This could lead term SM buyers to turn to the US or Middle East for SM cargoes.
There were concerns that the fall in S Korean SM supply could possibly lead to a rise in premiums for FOB Korea-based SM term contracts for 2016 amid bearish market sentiment.
The premium for 2015 FOB Korea SM term contracts fell to $7-9/mt above FOB Korea assessments, from around $11/mt in 2014, Platts data shows. JAPAN’S ASAHI KASEI SCRAPS SM PLANT
The permanent shutdown of Asahi Kasei’s 320,000 mt/year SM plant in Mizushima in March 2016 is likely to further reduce SM exports from Japan to South Korea.
SM shipments from Japan to South Korea has been already halved this year following the shutting of Nihon Oxirane’s 425,000 mt/year propylene oxide/SM plant in Chiba in May.
Nihon Oxirane’s previous SM exports were estimated at 200,000 mt/year, which is around 35.4% of annual SM imports from Japan to South Korea in 2014, according to South Korean customs data.
In 2014, South Korea imported 565,085 mt of SM from Japan, which accounted for 67% of total imports of 842,793 mt. Meanwhile, South Korea exported 1.42 million mt/year of SM to China, which accounted for 96.5% of total annual exports in 2014, according to the customs data.
LG CHEM, SAMSUNG SDI EXPAND ABS CAPACITY
Increasing SM demand from downstream acrylonitrile-butadiene-styrene capacity expansions planned in 2016 are also likely to tighten supply further, market sources said.
South Korea’s LG Chemical plans to expand the capacity of its 750,000 mt/year ABS plant in Yeosu by up to 100,000 mt/year in the first quarter of next year.
The expansion is likely be completed by end-January or February.
Samsung SDI plans to expand the capacity of its 560,000 mt/year ABS plant in Yeosu by up to 30,000 mt/year.
