Asia SM cost strikes 4.5-year high up on skyrocketing feedstock price; SM-benzene spread narrowsPosted by Hvidberg Walter on February 1st, 2021 The cost of styrene monomer in Asia struck a four-and-a-half-year high of ,645/ mt FOB Korea and also ,672/ mt CFR China Wednesday, as the cost of feedstock benzene rose to a record high of ,477/ mt FOB Korea on the same day, Platts data showed. The last time SM was greater was on July 15, 2008, at ,648.75/ mt FOB Korea, while the CFR China rate was last higher on July 4, 2008, at ,675/ mt. Both SM and benzene costs have been going up considering that early June, with SM rising 29% from ,276/ mt FOB Korea on June 1, and also benzene leaping 40.7% over the exact same period from ,049.50/ mt FOB Korea, according to Platts data. The rate surge from June till currently was generally as a result of a scarcity of benzene in China-- caused by heavy steam biscuit turnarounds-- which consequently resulted in a lack of SM, market sources stated. While benzene remains on a bullish trend, tracking a company United States market, SM may lose some heavy steam with the arrival of winter in China and the northern hemisphere, which usually reduces need for expanding polystyrene by the construction market. On top of that, exports often tend to wind down as overseas markets-- such as the US and also Europe-- unwind just ahead of the Xmas vacations. Meanwhile, SM margins have been squeezed with the SM-benzene spread tightening to its least expensive level in four years at 8/mt Wednesday. The last time it was lower got on November 12, 2008, at 2/mt. Generally, manufacturers of SM seek a spread well above 0/mt over benzene for successful manufacturing, but this likewise depends on the cost of the various other feedstock, ethylene. molecular sieve manufacturer includes regarding 80% benzene as well as 30% ethylene. Based on this estimation and including a production cost of 0/mt, SM margins turned adverse on Tuesday, and also on Wednesday were examined around /mt listed below the breakeven rate, at ,654.70/ mt. Integrated manufacturers of SM-- that base their expense on the rate of naphtha as they produce their very own benzene and also ethylene-- are, nevertheless, able to delight in record-high margins with the SM/naphtha spread at 0/mt on Wednesday. Naphtha adhered to petroleum rates down Wednesday, shedding /mt to 4.75/ mt, on a CFR Japan basis. The spread was the widest in over five years as it was last greater than this degree on January 17, 2007, at 3.50/ mt. Integrated producers of SM normally need a SM/naphtha spread close to 0/mt for successful manufacturing.Like it? Share it! More by this author |