Asia-Pacific styrene monomer (SM) producers are starting to reduce their operating rates after integrated producers endured a month of production losses for the first time since 2014.
Japan's Taiyo Oil has loaded down its 370,000 t/yr Yamaguchi-based SM unit since mid-October because of margin pressures.
Hanwha Total, South Korea's largest SM producer, has now decided to reduce operating rates by 10pc from 14 November. The company operates a total of 1.1mn t/yr of SM capacity across two production lines.
SM prices have declined since China returned from its extended 1-7 October national day holidays, to hit the lowest level since January 2016. Prices for November delivery stabilised before the holidays at $1,000-1,015/t cfr China, but subsequently fell to $905/t cfr China on 30 October.
Styrene prices have fallen further to $850-860/t cfr China for December arrival yesterday, the lowest since January 2015.
Integrated producers generally need the naphtha-SM production spread to be at least $450/t to cover costs. But the spread has stayed below this level for the last month and has been under $340/t since yesterday.
The benzene-SM production spread has also weakened to hit $212/t yesterday, the lowest since December 2014.
Most other producers in Asia aside from Taiyo and Hanwha Total plan to maintain their SM production rates for now.
By Kate Lee
