The production margins for styrene monomer in Asia have shrunk to its lowest level in over six months as SM prices have tumbled globally since early September, Platts data shows.
The SM price in Asia fell $34.50/mt, or 2.1%, day on day Tuesday to $1,609/mt FOB Korea and $1,635/mt CFR China -- the lowest prices assessed by Platts since mid-April.
Taking into account the combined cost of feedstocks benzene and ethylene -- at a ratio of 80:30 -- and a production cost of around $150/mt, the price of SM was about $89/mt above the breakeven level Tuesday -- the lowest profit since April 17, when it was at $87/mt, according to Platts data.
Benzene was last assessed down $23/mt day on day to $1,213/mt FOB Korea on Tuesday and ethylene was unchanged over the same period at $1,420/mt CFR Northeast Asia.
In comparison, the estimated profitability of Asian SM hit a year-to-date high of $323.40/mt on July 31, while the average profitability so far this year is at $144.80/mt.
SM's spread to petrochemical feedstock naphtha -- an important gauge for integrated producers' margins -- also shrunk to $675.40/mt on Tuesday, the lowest level since March 4, when it was at $657.30/mt.
Asian SM prices have fallen from a year-to-date high of $1,804.50/mt FOB Korea and $1,833.50/mt CFR China on July 22 as the turnaround season in Asia is coming to an end and prices in other regions, most importantly in Europe, have fallen sharply.
The unusually strong SM prices and margins earlier this year were caused by a long series of turnarounds, and on top of that several unexpected outages as well, which caused supply to tighten in Asia, and globally. In the first half of the year, in Asia alone, at least 18 plants went through maintenance that was both planned and unplanned, leading to an estimated production loss of about 600,000 mt.
Meanwhile, with European SM prices tumbling from an all-time-high of $1,944/mt FOB ARA on September 3 to $1,556/mt on October 22, arbitrage cargoes have been booked for Asia, market sources said.
