Asia set to lose 525,300 mt of SM supply in H2 due to turnarounds, doubling from H1

Asia and the Middle East will lose around 525,300 mt of styrene monomer supply in the second-half of this year with a total 23.8 million mt/year production capacity shut for maintenance during the period, according to Platts calculations based on information from market and company sources.

The turnarounds are scheduled at major SM plants in the Middle East, Taiwan, Japan and China over August-December.

During the first-half of this year SM production loss due to turnarounds and shutdowns was around 223,620 mt, Platts estimated.

In the first-half, seven out of eight SM plants in South Korea — accounting for around 76% of the country’s total SM production capacity — were shut for maintenance over March-May.

The market is divided about what effect the turnarounds in Asia and the Middle East will have on the regional SM market.

A Japan-based source said the shut capacity will likely support prices.

“If crude price is stable, this turnaround [in second-half 2015 will have an] impact on SM market like [it did] in H1,” said a South Korea-based source.

The SM plant turnarounds in South Korea in the first-half had pushed up Asian SM prices to their 2015 peak of $1,454.50/mt assessed on May 15, and the sharpest rise seen among all the other aromatics.

But another source said downstream markets in China were more bearish than expected because demand was not picking up despite August-December being peak manufacturing season.

The CFR China SM marker has been falling since hitting its seven-month high, mainly due to a softer demand and recent yuan devaluations. It was assessed at $978.50/mt Friday, 32.7% down compared to the all-year high.

China’s weak economic outlook also pressured the SM market. The flash Caixin/Markit China Manufacturing Purchasing Managers’ Index for August was published at 47.1, its lowest almost in six-year and a half. A PMI of less than 50 indicates contraction.

Middle Eastern SM accounted for about 25.5% of China’s total SM imports in 2014, making it the second biggest supplier after South Korea, which supplied 38%. Taiwan and Japan each supplied 12.7%, according to Chinese customs data.