Styrene monomer prices slid to a 30-month low last Friday, falling below the $1,000/mt mark to $983.50/mt CFR China on tumbling crude oil prices, soft downstream demand and rising inventories in East China, with current weak fundamentals expected to continue weighing on the market in the near term.
Prices were last assessed lower on May 30, 2016 at $982/mt CFR China, S&P Global Platts data showed.
A steady stream of deepsea cargoes resulted in a continuous buildup of stocks in East China. Styrene inventories in East China ballooned to 98,200 mt last Friday, up 38,700 mt from late October and 56,900 mt from the same period last year, according to market sources.
Inventories are now almost full, and would unlikely decline before restocking activities kick off early next year prior to the Lunar New Year in early February, market sources said.
Related Post
Further downside was also seen from a tepid downstream market, as key producers of downstream products — acrylonitrile-butadiene-styrene and polystyrene — continue to hold the wait-and-see stance as uncertainty remains amid sharp volatility in styrene prices.
POSITIVE MARGINS TO KEEP STYRENE OPERATING RATES HIGH
Still, Asian styrene margins remain in positive territory due to falling feedstock markets, which will continue to keep operating rates at styrene plants relatively high.
As of last Friday, Asian styrene monomer margin is calculated at $28.50/mt, up $1/mt from a day before, Platts data showed. Asian styrene margins have narrowed more than $200/mt from the middle of this year.
Benzene prices in Asia slipped to a two-year low last Friday amid growing supply as global demand for benzene slowed. FOB Korea benzene was assessed at $634/mt and CFR China at $650/mt. The FOB Korea benchmark was last assessed lower on October 18, 2016 at $633/mt, Platts data showed.
The recent price weakness is evident across all aromatics, but most market participants remain optimistic on the potential for benzene demand to recover nearing the Lunar New Year, during which prices usually spike.
While end-users had earlier thought it possible that benzene prices could fall below $600/mt FOB Korea, a trader said late Friday that it was still a “long way to go,” and would likely be led by domestic East China prices hitting Yuan 5,000/mt.
On the ethylene market, spot prices have been falling quickly since mid-November to $950/mt CFR Northeast Asia, Platts data showed.
Asian ethylene demand has been fading quickly amid narrowing derivatives margins, notably polyethylene. Last Friday, the spread between polyethylene and ethylene prices was calculated at $80/mt, lower than a typical breakeven spread of $150/mt, Platts data showed.
On the other hand, spot ethylene supply is ample as steam cracker operations in Asia remain high amid positive ethylene margins. Asian ethylene-naphtha spread is calculated at $463/mt last Friday, down $65.25/mt from a day before but still higher than a breakeven spread of $300-$350/mt.
“Asian ethylene is currently overpriced compared to feedstock naphtha and derivatives prices. There is more room that ethylene prices would come down,” a market source said.
–Regina Sher, [email protected]
–Tess Tseng, [email protected]
–Fumiko Dobashi, [email protected]
–Edited by Irene Tang, [email protected]
Source: S&P Global Platts
