The company has a total SM production capacity of 710,000 mt/year across two plants in Mizushima -- the 320,000 mt/year No. 2 unit and the 390,000 mt/year No. 3 unit.
The company has been reducing its SM run rates since the middle of June, due to high feedstock prices and crunched margins. The source also said it was "difficult to secure benzene", the main feedstock used to make SM.
Benzene supply has tightened since May as paraxylene plants in Asia, which produce benzene as a by-product, have lowered operating rates due to poor margins.
Benzene was last assessed at $1,382/mt FOB Korea on Wednesday and SM at $1,612.50/mt FOB Korea.
The SM-benzene spread fell from a high so far this year of $388.50/mt on March 18 to a 1 1/2-year low of $172/mt on June 25, Platts data showed. The spread has since widened to $230.50/mt on Wednesday, but SM production margins remain negative for non-integrated producers -- compared with integrated producers who base their cost on the price of naphtha -- as the price of co-feedstock ethylene was last assessed at $1,485/mt CFR Northeast Asia on Wednesday.
Based on the latest feedstock prices and a conversion cost of about $150/mt, the breakeven price of SM is estimated at $1,672.40/mt, $59.90/mt above the last assessed price at $1,612.50/mt FOB Korea.
SM is made of roughly of 79% benzene and 29% ethylene, including by-products such as toluene. (See
