The backwardation in the Asian styrene monomer market has steepened over the past one week as arbitrage cargoes from Europe and the US -- totaling around 20,000-30,000 mt -- are due to arrive in late December and early January, trade sources said Tuesday.
The backwardation between second-half December and second-half January has widened by $14/mt from $11/mt on November 27 to $25/mt on December 3, with the prices last assessed at $1,637/mt FOB Korea for loading in H2 December and at $1,612/mt FOB Korea for loading in H2 January, Platts data showed.
The backwardation could widen further with time swap bids and offers Tuesday indicating the spread between the two laycans to be of around $30-35/mt, sources said.
"Around 20,000 mt of SM loading in November was booked from Europe to Asia," a trade source said Tuesday, adding that the European cargoes could arrive in early January in Asia. And at least 10,000 mt of product from the US had been booked for arrival in the East in mid- to late-December, he added.
A second trader said almost 10,000 mt of SM was confirmed to have been shipped out from Europe for arrival in Asia over late December or early January.
But Asian SM prices and margins continue to be under pressure from bullish upstream benzene prices and reduced downstream demand during the winter season in China and the northern hemisphere.
"The market is still crazy, following benzene," a trader said.
Since the start of November, SM has risen 3.6% to $1.617/mt FOB Korea December 3. Over the same period, benzene rose 8.8% to $1,423/mt FOB Korea, Platts data shows.
