VINACHEM

Current prices are more than $200/tonne higher compared with $1,240/tonne CFR (cost and freight) China on 8 June, according to ICIS data.

Inventories in east China shore tanks this week are estimated at below 63,000 tonnes – the lowest for the year. This week’s level is just about 40% of the peak hit in early February at 151,000 tonnes, market sources said.

“Domestic availability [of SM in China] is tight and that has sustained domestic and import prices,” said a China-based trader.

Lower operating rates at regional plants over the past months due to weak demand have reduced prompt SM supply in Asia.

Some facilities in Japan have been operating at around 75% of capacity over the past two months as demand for SM has remained weak. In addition, the strong Japanese currency – the yen – has also made exports uncompetitive.

A heavy turnaround schedule at SM plants from February to April aggravated the supply tightness in Asia, market sources said.

“The tight availability is also exacerbated by limited arbitrage from the US,” said a Korean trader.

With prices in Asia trailing the US for the most part of this year, deep-sea fixtures to Asia have been limited.

While the third-quarter manufacturing for export season in China has been weaker than in the previous years because of soft external demand, demand for SM has slightly improved from the previous quarter, with the current tight supply expected to provide some ballast for spot prices in the near term.

“While manufacturing is not great this year in China, consumption of styrenic resins and SM will still be higher than the second quarter,” said a resins trader in Hong Kong.

SM is a liquid chemical used to make plastic resins like polystyrene (PS) and acrylonitrile-butadiene-styrene (ABS), as well as synthetic rubbers like styrene-butadiene-rubber (SBR) and styrene-butadiene-latex.

($1 = €0.80)