Some South Korean styrene monomer producers have settled 2013 term supply contracts with their customers at a premium of $8-9/mt to Platts FOB Korea SM assessments, an increase of $2-3/mt from a premium of $6/mt for 2012 term contracts, traders and producers said Friday.
Most contracts settled so far have been done at a premium of $9/mt, sources said, adding that some contracts were settled at $8/mt if loading of the cargo was subject to difficult logistical conditions. The buyers were largely trading companies, sources said.
There are five South Korean producers of SM -- Samsung Total, SK Innovation, LG Chem, YNCC and Honam Petrochemical. According to market sources, YNCC and Honam are still in the middle of their 2013 term talks.
The rise in premium levels comes on expectations that feedstock benzene prices will also rise sharply due to tight supply, sources said. So far only one South Korean benzene producer was heard to have settled its 2013 term contract, with premiums -- to Platts FOB Korea benzene assessments -- doubling from 2012 levels to $10-12/mt.
Tight benzene supply has also been a key driver of SM spot prices in the second half of 2012. Both SM and benzene prices have been climbing since early June, with SM rising 29% from $1,276/mt FOB Korea on June 1 to $1,645/mt FOB Korea on December 6, and benzene surging 40.1% to $1,470/mt FOB Korea over the same period, according to Platts data.
