The price spread in Asia between styrene monomer and its main feedstock benzene soared to an all-time high of $501.50/mt Monday, Platts data showed, as the SM market surged on news that South Korea's Lotte Chemical had delayed the restart of its 560,000 mt/year plant at Daesan.
SM was assessed at $1,699/mt FOB Korea Monday, up $24.50/mt from Friday, while benzene crashed through the $1,200/mt support level on Monday to close the Asian trading day at $1,197.50/mt FOB Korea, down $3.50/mt from Friday as traders continued to offload cargoes.
The Asian SM-benzene spread averaged $249.40/mt in 2012, and the close on Monday was the widest it has been since Platts began collating the data in January 2004.
The rally in the SM market also resulted in the Asian SM-naphtha spread hitting an 8 1/2-year high of $852.25/mt Monday, with naphtha sliding $9.63/mt to finish at $846.75/mt CFR Japan Monday. The last the time the SM-naphtha spread was wider was on November 18, 2004, when it stood at $855.88/mt.
Market sources said the extended shutdown of Lotte Chemical's SM plant, combined with a tight supply situation sent SM prices rallying on Monday.
Lotte Chemical's SM plant was shut unexpectedly June 10 due to technical problems and the company said at that time that the shutdown would last for more than 10 days. Last week, a source close to the company said it was hoping to restart the unit by the end of June, but sources now say the outage is expected to last until July 9-10.
In addition, SM inventory levels in China have been falling. The spot inventory level of SM in East China was estimated at around 66,000 mt last week, down 3,000 mt from the week before. In comparison, stocks were around 103,000 mt in the last week of June 2012.
The Asian benzene market, meanwhile, is currently long on supply, market sources said, partly due to Lotte Chemical's SM plant outage and also because of a turnaround at a downstream phenol plant in Taiwan.
Also, with the benzene-naphtha spread at $350.75/mt Monday -- above the breakeven level of about $300/mt -- Asian benzene producers continued to operate their aromatics plants at relatively high rates, sources said.
