Asian styrene prices remain choppy amid oil markets and tight supply

Following a rally that kicked off in early December- upon concentrated efforts of regional producers to cut run rates, Asian styrene prices have seen ebbs and flows since March. This recent volatility is right in sync with the oil markets, although the spot styrene market is still elevated at a year-high.

Spot styrene prices started the previous week on a soft note but climbed higher later in the week, as oil prices rebounded. Ending last week at $1340/ton CFR China, the spot market was flat after five successive weeks of volatility.

Trading activity was brisk, with several futures traders buying to cover short positions. Traders remain cautious, however, commenting that they expect further near term oil price volatility as no end is in sight for the end of the Russia - Ukraine war.

Regional styrene producers maintain reduced operating rates

Growing regional oversupply and squeezed margins have led to major producers cutting production across Northeast and Southeast Asia. Styrene prices have recovered substantially since late 2021, driven by concerted efforts of producers to keep operating rates low, across crackers and styrene plants, in South Korea, Taiwan, Japan and Southeast Asia. Meanwhile, higher naphtha prices since the start of the Russia-Ukraine war have also driven styrene prices higher.

South Korea’s largest styrene producer, Hanwha Total, cut operating rates by 20% since mid-November 2021. The producer owns a total of 1.1 million tons/year of styrene capacity across two production units. The plants are currently in maintenance turnaround. Since mid-December 2021, Lotte Chemical also reduced and has maintained lower operating rates at its 580,000 tons/year SM plant located at Daesan.

Meanwhile, LG Chemical had kept operating rates to 85-90% at the two SM plants located at Yeosu and Daesan. The plants have a combined 500,000 tons/year SM capacity. The producer has kept these reduced rates from March through to April.

Taiwan’s state-owned CPC had reduced run rates to 65% at its No 4 naphtha steam cracker located in Linyuan, Kaohsiung due to technical issues, according to industry sources. The cracker will undergo another maintenance turnaround from April 20 to May 10. The steam cracker produces 385,000 tons/year of ethylene and 230,000 tons/year of propylene.

The decrease in cracker run rates would tighten Taiwan’s domestic ethylene supply. Styrene producers are also considering cutting production since ethylene feedstock prices have been high. Taiwan’s styrene producers include Grand Pacific Petrochemical Corp, which owns two styrene plants, with a combined capacity of 380,000 tons/year at Kaohsiung. The other styrene producer is Taiwan Styrene Monomer Corp, which owns a combined capacity of 340,000 tons/year, also located at Kaohsiung. Taiwanese styrene supply has remained tight for a long while, given the dearth of ethylene supply.

In Southeast Asia, Indonesia’s sole producer, Chandra Asri has temporarily shut one of its units, with 100,000 tons/year styrene capacity. The producer owns a total 350,000 tons/year SM capacity at its Merak-based, West Java complexes. The two units are Indonesia’s only SM production facilities, and are integrated to Indonesia’s sole naphtha cracker which also produces 900,000 tons/year of ethylene.

Similarly, Malaysian producer, Idemitsu Styrene Monomer (ISM) also cut run rates at its 240,000 tons/year SM plant located at southern Malaysia’s Pasir Gudang.