Styrene monomer costs fall amid maintenance shutdown season

The styrene monomer market in Asia has been following the firming trend since mid August 2016 due to a number of Fareast Asian plants undertake maintenance shutdown, which tightened regional supply. However, market loses steam over the past week with styrene monomer prices based on FOB Korea term fell $50/ton compared to late August, touching $976/ton on Wednesday, 28 September 2016. This comes as a surprise to many market players, who were expecting continuous strengthening SM costs as most of the shutdown concentrate in September.

It is reported that most downstream producers have already replenished sufficient material before the shutdown with expectation of firmer costs. Meanwhile, sources also informed of lower operation rate in China during September due to several events including the G20 Summit and mid-Autumn festival, which reduce the need for SM feeds. On the other hand, two new SM plants in China started up during Jun-July have compensated for the production loss. Xinri Chemical’s 300,000 tons/year plant in Changzhou and CNOOC’s 300,000 tons/year plant in Ningbo both are running at full rate given positive profit margins.

Players are expecting the bearish sentiment to persist in the near term, as several plants are due to restart soon, easing regional supply. Some have anticipated a small rally in October in line with pick up in downstream demand.