Crude Oil and Benzene Price Drop Exerts Pressure on Styrene Monomer Market
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Trader offers were quoted at ₹94++ per kg Ex-Kandla and Ex-Hazira for immediate lifting on an advance payment basis. In the first half of August, styrene prices were bullish, but from the first week of September 2024, domestic prices began correcting due to a sharp decline in upstream crude oil and feedstock benzene prices.
Chemical Price
- Importers reduced styrene monomer prices by ₹1.50/kg, bringing them to ₹94.50++ per kg Ex-Kandla and ₹94.25++ per kg Ex-Hazira on 60-day credit terms. Trader offers were quoted at ₹94++ per kg Ex-Kandla and Ex-Hazira for immediate lifting on an advance payment basis.
- In the first half of August, styrene prices were bullish, but from the first week of September 2024, domestic prices began correcting due to a sharp decline in upstream crude oil and feedstock benzene prices.
- This week, the Asian benchmark CFR China styrene monomer future contracts also saw a correction amid bearish market sentiments. Detailed figures are as follows:
- SM CFR China 1H Sep: $1,121/mt
- SM CFR China 2H Sep: $1,120/mt
- SM CFR China 1H Oct: $1,109/mt
- SM CFR China 2H Oct: $1,109/mt
- SM CFR China 1H Nov: $1,099/mt
- SM CFR China 2H Nov: $1,098/mt
Chemical Demand and Supply
- Supply remains abundant with continuous vessel arrivals. However, over the past two weeks, liquidation has been challenging due to heavy rainfall and floods in Gujarat.
- Since styrene monomer is water-sensitive, dispatches have been significantly affected during the heavy downpour. Additionally, the ongoing Ganesh Chaturthi festival holidays in Maharashtra and Gujarat are expected to further limit drawdowns from the ports in the upcoming week.
- Liquidation pressure is gradually building, and on the other hand, corrections in feedstock benzene prices and the crash in upstream crude oil are contributing to bearish market sentiment.
- The declining Asian benchmark future contracts for CFR China styrene monomer prices further indicate bearish trends across the Asian market.
- India’s monthly demand for styrene monomer stands at around 70,000 MT, entirely met through imports. Key consumers include industries such as polystyrene, expanded polystyrene (EPS), paints, coatings, styrene-butadiene rubber, and ABS resin.
- Demand from these sectors remained moderate in August 2024 and is expected to stay stable through September, with a likely downturn in October. The surplus inventory and lower replacement costs are expected to weigh on the market in the short term.
- In terms of cracking dynamics, the price spread between benzene and styrene is currently just $110/mt, significantly lower than the required $225/mt spread for profitability.
- To break even, manufacturers would need either a decrease in benzene prices or a $115/mt increase in styrene monomer prices. With the bearish trend in crude oil and benzene prices, downward pressure on styrene monomer prices is likely to persist.
Chemical News
- In the international market, upstream crude oil benchmark WTI prices fell by 2.14% to $67.67 per barrel on Friday.
- Feedstock FOB Korea benzene prices stood at $980/mt, FOB Korea ethylene prices were at $840/mt.
- Downstream FOB Korea styrene monomer prices were at $1,090/mt.
Expert Opinion
- It is expected that styrene monomer prices will remain bearish due to surplus inventory, cheaper replacement costs, and weak downstream demand.
- Buyers are advised to exercise caution while building inventory, given the bearish trends in crude oil and benzene prices.
Daily Market Report
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