Margins for producing styrene monomer in Asia have shrunk rapidly in March as SM prices tumble amid weak sentiment in China, with the spread to feedstock benzene narrowing 17% and to naphtha shrinking 8% since the end of February, Platts data showed Tuesday.
SM prices tumbled $93.50/mt over Friday and Monday to be assessed at $1,593.50/mt FOB Korea and $1,611.50/mt CFR China Monday, narrowing the spread to benzene $50.50/mt over the period to $240.50/mt -- the lowest since December 31, 2012 -- with benzene assessed at $1,353/mt FOB Korea Monday.
Based on the latest benzene price and with fellow feedstock ethylene assessed at $1,400/mt CFR Northeast Asia Monday, and factoring in a conversion cost of $250/mt, SM was assessed $31.40/mt below its estimated break-even level of $1,624.90/mt FOB Korea.
SM producers typically seek a spread well above $200/mt over benzene for profitable production, but this also depends on the price of ethylene. SM consists of about 80% benzene and 30% ethylene.
The spread between SM and petrochemical feedstock naphtha shrunk to its lowest level in more than three months at $657.30/mt Monday -- down 8% since end February -- with naphtha assessed at $936.25/mt CFR Japan Monday.
Integrated producers of SM typically require a spread close to $550/mt over naphtha for profitable production, as they produce their own benzene and ethylene.
