Spread between styrene monomer and naphtha narrows to smallest spread since late April 2011

The spread between styrene monomer and petrochemical feedstock naphtha narrowed to US$370/mt Monday, the smallest spread since late April 2011, Platts data showed. Poor demand for SM in China amid relatively high inventory levels within the country has pushed SM prices down in recent weeks, while continuously high energy prices are keeping naphtha firm. This weakening trend is expected to continue as demand fails to revive-most chemicals are weak compared with Brent and naphtha. The price of SM was assessed at US$1445/mt FOB Korea, while naphtha rose US$11/mt to US$1075/mt CFR Japan. Integrated producers of SM seek to keep the spread with naphtha at around US$450-500/mt, or preferably even wider, as they say the general cost of production has increased with relatively high energy prices. The inventory level of SM in the east of China was heard at 125,000 mt last week, while market sources estimates a "normal" inventory level to be around 70,000 mt. There had been reports of end-users in China selling their feedstock SM cargoes back into the market because of poor demand and margins for their end-products.
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