The 2016 premiums for FOB Korea styrene monomer term contracts have been settled at $10/mt to the benchmark FOB Korea assessments, up from around $7-$/mt in 2015, a number of market sources said Friday.
The rise was attributed to expectations of supply tightness in the Asian SM market in H1 2016 amid turnarounds in Japan, South Korea and China.
The Asian SM market is set to lose around 222,900 mt of production in H1 2016 as 1.92 million mt/year of its 19.6 million mt/year capacity is shut for maintenance over February-May in Japan, Taiwan and South Korea.
The three provided 63.4% of China’s SM imports in 2014, Chinese customs data showed.
Additional impact will come from the permanent shutdown of Asahi Kasei’s 320,000 mt/year SM plant in Mizushima in February-March.
SM shipments from Japan to South Korea halved this year following the shutdown of Nihon Oxirane’s 425,000 mt/year propylene oxide/SM plant in Chiba in May.
The company’s SM exports were estimated at 200,000 mt/year and had comprised 35.4% of Japan’s SM exports to South Korea in 2014, South Korean customs data showed.
However, a new SM plant is due to start up in China in March 2016; Xinri Chemical’s 300,000 mt/year SM plant in Changzhou, Jiangsu province.
The scrapping of one plant and the startup of the other will put the net loss of SM production capacity in Asia at 20,000 mt/year in 2016, or 10,000 mt in H1.
With production loss of 222,900 mt due to turnarounds, the 160,000 mt loss from the plant shutdown and the 150,000 mt of new supply from the startup in H1 2016, the net monthly production loss in the six-month period is estimated at 38,820 mt, according to Platts calculations.
Most CFR China-based SM term contract settlements are still pending but are expected to be concluded soon, a market source said Friday.
