The arbitrage to ship styrene monomer from the US Gulf to Northeast Asia has opened this week after being closed since late last year, traders and end-users in Asia said.
But demand remains uncertain as China still has a relatively high inventories of styrene in storage.
"The arbitage is open, the problem is who can take the cargo," a South Korean trader said Thursday.
The US has been looking at Europe as a destination for product and market sources said 12,000 mt of styrene over and above contractual volumes was heading to Europe in April. Sources said there are many in the US considering whether to send product to Asia or Europe as both arbitrage windows are workable.
Shipping 5,000 mt -- or a larger size -- from the US Gulf to South Korea could make sense at the moment, Asian sources said, given that the cost of freight would come to around $70-75/mt. With the US Gulf assessed Thursday at 71.4 cents/lb FOB, or $1,574.08/mt, adding freight of $70-75/mt would bring the price in at $1,675-1,680/mt delivered to South Korea's main ports.
An end-user said the US cargoes were being offered for arrival in late May, a laycan that was assessed Thursday at $1,640/mt CFR China. US prices were pegged at Thursday at 71-72 cents/lb FOB USG for April and May. It takes between 30-45 days to ship US product to Asia.
"We got offers from the US and Japan, but have no room for April and May delivery cargoes. Our inventory is too high," a South Korean end user said this week.
Sources estimated styrene held by traders in East China to be around 175,000 mt this week -- down about 5,000 mt from the week before -- while the total inventories held by both traders and end-users in China was estimated at about 290,000-295,000 mt, down more than 5,000 mt from the previous week -- but still considered as a high inventory level.
An end user in the east of China also said offers for US origin cargoes were being made to Chinese buyers at the moment around $1,650/mt CFR China.
"Deals can be made at $1,630-1,635/mt CFR China, I think," the end user said.
