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Thursday, May 26, 2022

Asia SM-benzene price spread widens on Europe plant outage, but China stocks may cap rise

The Asian price spread between styrene monomer and its main feedstock benzene widened by $7.50/mt to $250/mt early Thursday afternoon following an SM plant outage in Europe, but high stocks in China were expected to limit the widening of the spread, market sources said.

The spread recovered after sliding to a four-month low of $242.50/mt on Wednesday. The last time the spread was narrower was on February 12 at $236/mt.

Asian styrene monomer prices rose $14/mt day on day to be pegged at $1,553/mt FOB Korea and $1,579/mt CFR China early Thursday afternoon, following overnight price spikes in Europe and the US, according to Platts data. Benzene rose $6.50/mt to $1,303/mt FOB Korea over the same period.

Even though the Asia SM-benzene spread expanded Thursday on the plant outage, traders expect the widening of the spread to be limited by relatively high SM inventories in China, which will put a lid on the rise in Asian SM prices.

This week, market sources said the inventory level of SM held by traders in East China rose from around 153,000 mt last week to 165,000-170,000 mt this week, while the total inventory held by both traders and end-users in the same region rose to 270,000-275,000 mt, up from roughly 245,000 mt last week, meaning that prompt supply in the Chinese market is ample.

European SM prices surged Wednesday following an outage at a SM/propylene oxide plant in the Netherlands, which in turn triggered the spike in US SM prices and raised Asian prices.

In Europe, prices rallied $70/mt, or 4.5%, Wednesday in the largest day-on-day move in 2014, to close at $1,610.50/mt FOB ARA, while in the US, SM prices jumped 2.10 cents/lb ($46.29/mt) from Tuesday to 71.10 cents/lb ($1,567.47/mt) FOB US Gulf Coast Wednesday, according to Platts data.

SM prices surged in the West Wednesday in reaction to the fire that broke out at Ellba’s SM/propylene oxide plant at Moerdijk, in the Netherlands. The 50:50 JV between Shell and BASF was hit by an explosion and fire late Tuesday. The SMPO unit has a capacity of 550,000 mt/year of SM and represents around 9% of Northwest European production. Sources were predicting that the plant would likely remain offline for several months.

– Platts.com

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