Japanese producer Taiyo Oil has reduced operating rates at its 370,000 t/yr styrene monomer plant in Yamaguchi prefecture because of negative margins.
The producer was running normally until operating levels were cut by 10pc around two weeks ago. It is unclear when Taiyo Oil will resume normal operations.
Styrene prices fell by more than 11pc about three weeks ago to the lowest level since January 2016.
Prices for November delivery stabilised before China's 1-7 October national day holiday at $1,000-1,015/t cfr China. But November last traded at $905/t cfr China on 30 October.
Cash profits at regional non-integrated producers were down to $19/t this week, according to Argus' calculations, following a modest rebound in co-feedstock ethylene prices in the same period.
But producers are using costlier feedstock benzene and ethylene from their inventories and selling off styrene at multi-year low prices, causing production losses.
The naphtha-styrene production margin that integrated producers use as a reference point for assessing profitability is now at $373/t, the lowest level since December 2014.
The benzene-styrene production spread breached below the $240/t breakeven reference point in two trading sessions on 16-17 October. It now stands at $256/t, as benzene prices were dragged lower by weak derivative demand.
This rationalisation will remove 6,000 t/month of spot styrene supplies from Taiyo Oil's unit, consequentially reducing demand for benzene. To balance this out, the producer has adjusted operations at its transalkylation unit (TAU) to produce more isomer-grade mixed xylene (MX).
The TAU has a capacity of 300,000 t/yr for benzene and 300,000 t/yr for MX.
