US styrene to see improvement in 2020 despite surging production costs

摘要

Despite soft styrene demand,lower South Korean import volumes have resulted in supply tightness.From 1Q-3Q,South Korea sent 84K mt/month on average,but Oct.and Nov.import volumes were at 38.4K mt and 47.4K mt,respectively.From Dec.1-10,only 9K mt of styrene was brought into the US from South Korea.Even though the US could replace lost Asian imports with styrene from Canada,Europe,and Latin America,the volumes from these regions will not likely be enough to offset the lost supply.However,in the US,styrene margins have been narrowing with production costs ranging from $760-790/mt FOB USG as Platts estimates margins of $785/mt.Meanwhile,US prompt spot prices closed at $785/mt FOB USG on Dec.13 and averaged $784/mt for the first 15 days of the month.When incorporating the monthly contract formula,contract costs are estimated to be around $867/mt,which would put margins in deep negative territory.Platts estimates that formula-based sellers could see a loss of $158K with every 5K mt sold,or a loss of $31.60/mt.