The price spread in Asia between styrene monomer and its main feedstock benzene soared to an all-time high of $437/mt Monday, as SM prices jumped on tight supply, Platts data showed.
SM was assessed at $1,718/mt FOB Korea Monday, up $39.50/mt from Friday, and benzene edged up $3/mt to $1,282/mt FOB Korea over the same period.
A South Korean trader said benzene "is not moving."
"It is neither tight nor long, and no changes in [traders'] positions. But SM is tight and getting tighter recently," the trader said.
The spread retreated by $4.50/mt from Monday's assessment to $432.50/mt Tuesday morning. Benzene jumped $5/mt from Monday's assessment to $1,286/mt FOB Korea Tuesday morning, and SM inched up $0.50/mt to $1,718.50/mt over the same period.
Platts assessments for the Asian SM-benzene spread go back to 2004.
Industry sources attributed the tight SM supply to an unexpected shutdown by South Korean producer Lotte Chemical and the delay of deepsea cargoes that have led to lower SM inventories in South Korea and Japan.
"Everybody says [the SM price hike is due to the] delay of deepsea cargoes and Lotte's trouble. Also, most end-user's SM inventory is very low," said a South Korean end-user.
A trader added that China had low inventory and supply tight. "The tightness seen in June rolled over to July, so that's the bullish factor," he said.
Some market participants attributed the recent surge in SM prices to firm support from traders who were seeking to cover their short positions.
"It seems short [covers are] coming out, and long players [are trying] to push up [the market]," a broker said.
On the flip side, benzene prices have not tracked the steep uptick in the SM market.
Asian benzene prices had been rangebound since early June at about $1,273-$1,288.50/mt FOB Korea. The reduced benzene supply in Asia, resulting from various turnarounds of aromatics plants from mid-April to June, balanced the weaker demand from the US and China.
