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Imports to China slump below 50,000 t in April 2022
China’s SM exports hit all-time high in May 2022
China to add over 2.5 million tpy to its SM capacity in Q1 2023
Styrene prices were varying widely from $933/t to $1,500/t CFR China through 2022 to reach their highest for the year in early June because the production cutbacks caused by poor margins and active exports outside the region reduced SM availability in Asia. In 2021, the commodity cost was ranging at $883—1,388/t CFR China.
The year 2022 kicked off with low prices across Asia. Demand softened amid the typical trade slowdown before the Lunar New Year on 1 February. In China, supply was outstripping demand in view of downstream production cutbacks during the Winter Olympics in Beijing from 4 February to 20 February. SM capacity expansion put pressure on the local market. However, sentiments changed in the post-holiday period. Asian producers started lowering cracker run rates to avoid losses. Smaller ethylene output limited the availability of the feedstock for SM production at integrated facilities. The TAR season was another factor in SM output contraction in spring. The monomer consumption increased in H2 February in the run-up to the summer air conditioning season. An upturn in downstream production in China in the wake of PS and EPS plant startups in Q1 2022 also bolstered the SM market.
In Q2 2022, sentiments continued strengthening. Styrene shipments outside Asia surged, driven by growing capacity in China and healthy demand outside the region. In China, supply improved owing to several SM facility startups in Q1 2022. The plants that Ningbo ZRCC LyondellBasell and Shandong Lihuayi commissioned in January and February 2022 added 1.3 million tpy to the country’s SM capacity. As South Korea, Turkiye and the Netherlands were lacking the material at the time for various reasons, they became the largest importers of the Chinese material. As a result, China’s styrene exports reached an all-time high of some 155,400 t in May 2022*. Reminder: China’s exports previously peaked at 104,700 t in April 2021*. SM prices were rising further as well because imports into the country were shrinking. In April 2022, China received a mere 45,900 t of deep-sea SM, which was the smallest volume ever*.
After prices peaked at $1,500/t CFR China in early June, they were tending downwards for most of Q3. Although supply was decreasing in view of continuing output cutbacks and the monomer outflow from the region, it was adequate for off-season demand. Downstream producers stopped storing the material because their own sales were hindered. As a result, downstream plants were running at reduced rates. Taiwan’s ABS output, for instance, almost halved in summer. In China, power cuts at some factories in the aftermath of a drought weighed on the demand along supply chain in August. Sentiments improved in September when buyers, urged by the approach of the Golden Week in China from 1 October to 7 October and by a supply crunch, started restocking. East China’s styrene stocks reached their lowest of 41,000 t for the year in early September due to delivery delays after Typhoons Hinnamor and Muifa.
In Q4 2022, demand was lagging behind supply in Asia. Active restocking home appliance makers typically engage in before Christmas fell short of expectations as the rising utility bills and recession fears made a dent in demand in the global market in 2022. China’s zero-COVID policy was also stalling the domestic appliance and the automotive markets. Demand in Iran helped Chinese suppliers find buyers for the material left unsold at home. So, a batch of up to 38,000 t of SM was reportedly booked for loading in China in November and December to Iran where buyers had to look for the foreign material to fill the gap created by the maintenance of Pars Petrochemical plant in Asaluyeh, Iran, for most of H2 2022.
In view of a rise in China’s SM production and a slowdown along the supply chain, prices were gyrating throughout 2022. Market sources believe that 2023 may bring even more challenges. Trade may slacken at the beginning of 2023 as the SM plant startups initially scheduled for Q4 2022 may occur in Q1 2023. China may add over 2.5 million tpy to its SM production capacity as a result. Demand may improve as late as H2 2023 because several downstream PS and ABS units are expected to come on stream and the Chinese authorities to lift lockdown restrictions fully at earliest in H2 2023.
*According to General Administration of Customs of People’s Republic of China
Undersupply fuels sentiments in H1 2022
China’s BD output grows with startups coming on stream in Q3 2022
European suppliers sell BD in Asia in Q4 2022
Butadiene prices have been varying widely from $600/t CFR NEA up to $1,600/t CFR NEA in 2022 to reach the year's high in H1 June amid tight BD supply and healthy regional and overseas demand. In 2021, they were ranging from $610/t CFR NEA to $1,600/t CFR NEA, showing the similar scenario with a steady uptrend by summer and a steep decline during autumn.
In Q1 2022, BD prices were spiralling up because of lower BD production and strong overseas interest in the regional material. A reduction in cracker operating rates in view of poor olefins sentiments led to lower BD availability. Those producers that had to cut utilisation were looking for the regional BD to cover output losses and meet long-term obligations. Besides, demand from US customers was healthy, which prompted Asian suppliers to boost shipments there. So, South Korea’s exports to the USA rose by 25,700 t to 33,400 t in Q1 2022 versus Q1 2021*.
Undersupply was bolstering the Asian BD market throughout Q2 2022. Margins for olefins production remained low, so most producers continued running their units at reduced rates, consequently, cutting BD output. A decline in imports contributed to a depletion of regional stocks. China’s supplies from abroad went 17,700 t down to 30,800 t in Q2 2022 versus Q2 2021 due to a drop in shipments from Singapore and Taiwan**. South Korea reduced imports by 39,500 t to 72,800 t in the same period*.
After prices peaked at $1,600/t CFR NEA in H1 June, they started tending downwards. In Q3 2022, supply was growing with the commissioning of three Chinese units with the total annual capacity of 480,000 t. On the other hand, regional interest began weakening in Q3 2022. BD became unaffordable to most downstream producers amid squeezed or even negative margins, so they withdrew from the market. Logistics were severely disrupted on lockdowns in East China. Some end users found themselves overstocked and had to decrease production.
Supply has been outpacing demand in Q4 2022. Although weak performance in polymer markets forced Asian producers to either cut output or keep crackers shut for prolonged repairs, regional customers have hardly suffered from the BD shortage. Several downstream makers have either lowered run rates or overhauled their units in Q4 2022. Demand was even worse in Europe. Given a slowdown in domestic downstream industries and limited buying interest from the US players after the heavy cargo flow fixed previously from everywhere to the USA, suppliers had to look for other outlets for European BD outside the region. Sporadic demand in China made them sell BD in Asia. Thus, a Chinese rubber manufacturer bought 7,500 t of European BD at $750—760/t CFR China for H2 December delivery. According to shipbrokers, Thekla Schulte vessel loaded the lot in ARA in end-November.
In 2023, the prices may increase and fall, keeping a structure seen in the last couple of years. Sentiments may lack upward drivers in Q1 2023 as supply is expected to grow with a few new BD units launching and demand may stay tepid on the typical slowdown amid the Lunar New Year. BD may start appreciating due to preparations for a spring TAR season. In Q2 2023, the heavy season of repairs to crackers is likely to reduce olefins output, including BD one. Besides, BD consumption may rise as a few downstream startups will come on stream. Sentiments may slacken in Q3 2023 on slower activities in summer. However, downstream markets may witness some recovery owing to the complete lifting of lockdowns in China expected in H2 2023.
Please be sure to contact Chem-Courier team for access to our market intelligence to keep up with the latest news from the Asian BD market in 2023.
*According to Korea International Trade Association (KITA)
**According to General Administration of Customs of People’s Republic of China
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