Margins for non-integrated Asian styrene monomer producers widened to an 18-month high in the middle of last week, due to low stocks in China’s domestic market, rising downstream demand and South Korean plant turnarounds, as per Platts. The margin was calculated at US$122.10/mt FOB Korea above the breakeven level Thursday. It was last higher October 14, 2013, at US$145.7/mt, Platts data showed. The breakeven level is calculated using feedstock benzene and ethylene prices and a production cost of US$150/mt.
Market participants attributed the widening SM margin to a bullish domestic market in China, where supply has tightened due to SM stocks being lower than in previous years. Another factor in the wider margin is improving downstream demand during massive plant turnarounds in South Korea. Six of South Korea’s eight SM plants are set to shut for maintenance over March-June, representing 76% of the country’s total production capacity.
SM end-users in China typically stockpile in the first quarter, which was not seen this year as crude oil volatility made them delay buying SM. Demand for SM is expected to rise as warmer weather leads to more construction activity, which boosts demand in the downstream expandable polystyrene market. EPS makers account for around 30% of China’s total SM demand, market sources said.