SM under pressure as downstream units remain shut

Demand for styrene monomer (SM) remains under pressure despite the end of the official holidays in China on 9 February. Downstream expandable polystyrene (EPS) and acrylonitrile butadiene (ABS) units are either still shut or are operating at low rates as a result of the coronavirus outbreak.

EPS plants typically shut completely during the lunar new holiday and were due to resume but most remained idle as the lockdown of cities created logistical bottlenecks. Workers were unable to return to work while finished products could not be transported to customers because of a lack of drivers.

SM inventories also accumulated as a few consumers operated at low rates, with potential further rate cuts later this week. Inventory pressure is growing at Jiangyin and Zhangjiagang where SM tanks are located. Some imports have been diverted to Hong Kong, according to an ABS producer. ABS is also a key consuming sector of SM.

Other consumers have already initiated discussions with their suppliers to either cancel or delay deliveries of SM cargoes that have not been loaded. Most of these SM cargoes would originate from Japan, South Korea or southeast Asia. No force majeure has been declared by companies in the market so far.

By Kate Lee