US styrene liquidity increases in October on strong Asian buy interest

Houston — US spot styrene monomer transactions posted sharp increases in October amid increased demand from East Asia, South Asia and Turkey.

S&P Global Platts data showed at least 120,000 mt of styrene was sold during October, with the bulk of those transactions slated for November loading, for which 75,000 mt was heard fixed. An additional 30,000 mt was heard fixed for December loading, while at least one 5,000 mt parcel was heard sold for January. October-loading sales were limited, with just 10,000 mt reported sold during the month.

Asian shortfall boosts demand

Much of the interest was seen in South Korea and other Far East destinations and came amid talk of delays in new capacity startups.

Additionally, sharp declines in Chinese styrene inventory levels contributed to the uptick in buy interest. South China's styrene inventories fell from a 2020 high of 270,500 mt on March 15 to as low as 154,000 mt on Oct. 25, Platts data showed. The increase in demand pushed US spot styrene prices up $110 on the month. Prompt material was last assessed on Oct. 30 at $705/mt FOB USG, a seven-month high.

US styrene prices were expected to see some downward pressure as producers in the US Gulf return from planned and unplanned outages. Westlake Chemical lifted a force majeure declaration on Oct. 26 for styrene supply from its Lake Charles facility, which was taken offline in late August due to Hurricane Laura. Additionally, one of the two styrene units at SABIC and Total's joint venture CosMar was down for planned maintenance in October and was expected to restart in mid-November, sources said.

Upstream impacts

The increase in styrene liquidity and associated gains in pricing helped to pull benzene prices higher.

Most reported benzene trades in October transacted during the second half of the month and specified November delivery terms. Such a trading pattern was expected, as liquidity in the US benzene market tends to increase during 10-day period in the latter half of each month, when physical trades count toward a weighted average that is used to settle the contract price.

At least 385,000 barrels of benzene sold in October was reported for delivery in November, Platts data showed. Roughly 120,000 barrels were designated for the Lower Mississippi River, where the bulk of US styrene is produced. Nearly 150,000 barrels was heard fixed for December loading, suggesting continued strength throughout the remainder of the year.

Prompt benzene prices gained 26 cents in October, finishing on Oct. 29 at 166 cents/gal DDP USG for November delivery. September ended with October-delivered benzene assessed at 140 cents/gal DDP USG on Sept. 30.

The downstream demand's impact on benzene appeared to be continuing Nov. 2, when a bid-offer spread of 169-182 cents/gal DDP USG was seen.

Sources anticipated that the market would retain strength in the near term as refinery utilization rates remained low, output from toluene conversion was heard reduced, South Korean exports to the US dwindled and downstream styrene demand increased.