Styrene monomer inventories in the key east China market surged 71.85% week on week last Friday to 55,000 mt, the sharpest increase in 2015, according to industry sources and Platts historical data.
This was due to the arrival of SM cargoes from the US — which were loaded over June-July — and delayed cargoes due to typhoons in the region, industry sources said.
This sharp spike in east China stocks Friday pressured the CFR China market, which shed $47/mt day on day and $186/mt week on week to $937.50/mt, according to Platts data.
The monthly average of east China’s SM inventory has, however, been hovering at a historical low since February.
The inventories have been holding below last year’s levels and also below the four-year average. For July, east China’s SM inventory averaged 35,140 mt, down 62.97% from the four-year average of 94,912.50 mt.
The inventories slid to almost a 74-month low of 29,000 mt on June 26. It was last below that level on April 17, 2009, at 25,000 mt.
East China’s SM stocks had nosedived after hitting a year-to-date high of 133,000 mt on March 6 on tight supply.
This was due to a heavier-than-usual turnaround season in main supplier South Korea over March-May, deepsea supply from the US being diverted to Europe where prices were higher, tight credit reducing the purchasing power of US dollar-denominated SM cargoes for Chinese buyers and a rebound in demand from downstream expandable polystyrene makers.
Looking ahead, market sources expect to see a slight recovery in stock levels — an improvement from the first-half of the year — amid current lackluster demand from downstream markets and China’s slower economic growth.
China’s preliminary Caixin manufacturing PMI score fell to 47.1 in August — the lowest since April 2009 — and was below analyst expectations of a 47.7 reading.
A score below 50 indicates a contraction in the Chinese manufacturing sector, while above 50 indicates growth.
