Though arbitrage economics to send US styrene monomer to Asia is marginal currently, some deepsea cargoes have been fixed and some more were likely to be fixed for arrival in Asia in June, traders said this week.
The volume being sent is still uncertain, could be around 30,000-50,000 mt, they said, adding US producers were shipping the cargoes mostly to clear inventory and cut losses.
The CFR China SM price was assessed at $1,501/mt Tuesday, while the FOB US Gulf price was 65.9 cents/lb ($1,452.40/mt). The price spread of $48.60/mt is far from profitable, given the freight for shipping 5,000 mt from the US Gulf to main ports in China is around $70-80/mt.
"I just heard deepsea cargoes of around 30,000 mt being fixed out of the US, and more cargoes are being booked for China [arrival]. It will come to 50,000 mt soon," a trader said Wednesday.
Another trader said the arbitrage was not really workable, but the US cargoes had been booked for shipments to Asia at a discounted price because the US producers were "clearing inventory and cutting losses."
A recent shipping report said 15,000 mt of SM had been fixed to arrive into China from the US and "a couple more" 5,000-mt cargoes were likely to be fixed.
Asian SM prices have been on an uptrend after hitting a low of $1,447.50/mt CFR China on March 23. They have since risen by 3.7% to $1,501/mt CFR China Tuesday. Over the same period, US prices have dropped 0.5% to 1,452.40/mt FOB US Gulf.
The main reason for the price increase in Asia was a heavy turnaround season, and unexpected production problems affecting producers in Japan, Taiwan and Kuwait over March-April. Also, seasonal demand for expandable polystyrene has increased in spring.
