02 May 2005 00:01 [Source: ACN]
A Taiwanese producer said prices in China had fallen so steeply that it had stopped offering material to China. Prices in China for packaging-grade EPS were at US$1270-1290/tonne cfr China, US$130-160/tonne lower than in late March.
The producer said that, with styrene costs at US$1140-1160/tonne cfr Taiwan and conversion costs of US$160-180/tonne, it had to secure a minimum price of US$1300/tonne cfr China to break even.
The main reason for the price plunge was poor performance in the finished-goods sector.
‘The sale of consumer electronic goods such as television sets and refrigerators had been particularly slow during the Lunar New Year and sales have not improved since. This is affecting the packaging industry in China,’ said the Taiwanese producer.
The producer added that it was diverting sales to other Northeast Asian (NEA) countries, where prices were higher.
It said: ‘Japan is a much more attractive market as we are able to achieve prices of US$1310-1330/tonne cfr NEA there.’
Prices in the Chinese domestic market had also been diving for packaging-grade EPS.
A Chinese producer said erratic movements in styrene costs were aggravating the bearish market sentiment.
The producer said many end-users were unwilling to hold high inventory levels of EPS owing to extreme volatility in the domestic styrene market. Domestic EPS prices were at Rmb11 000–11 200/tonne ex-works, Rmb1000-1200/tonne lower than in late March.
‘With styrene costs at Rmb10 500/tonne and conversion costs at Rmb1000/tonne, we are close to losing almost Rmb300-500/tonne,’ said the producer.
A Chinese trader, however, maintained a cautious outlook.
‘The Chinese government is going to impose tighter credit controls in H2 2005. This is likely to affect the sales of EPS producers and it is likely that producers will find it difficult to ramp operating rates back to 100%,’ he said.
Prices in Southeast Asia (SEA) also took a tumble in line with falling prices in NEA. Prices in SEA for packaging-grade EPS were at US$1330-1350/tonne cfr SEA, US$80/tonne lower than in late March.
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