The price spread between Asian styrene monomer and petrochemical feedstock naphtha peaked to an eight-year high of US$819.90/mt on Wednesday, on short covering amid low spot inventory in China, Platts data showed. SM prices spiked by over ten dollars in the day to US$1675.50/mt FOB Korea -- hitting a three-month high -- while naphtha fell over the same period by US$18.90/mt to US$855.60/mt CFR Japan on weaker crude oil futures. The SM-naphtha spread was last wider March 8, 2005, when it was US$825.75/mt.
China's tight supply was mainly caused by turnarounds at SM plants in Asia in the first half of this year, with more than a dozen plants shutting for maintenance lasting from a few weeks to two months. The situation was exacerbated by extended plant shutdowns in Saudi Arabia in March and April, the same time several South Korean producers shut for maintenance. This week, market talk of SM shipment delays from the US caused traders to cover their short positions, which pushed up prices. As per a Chinese trader, arbitrage cargoes from the US had loaded late and were now expected to arrive in late July, compared with previous estimates of June.