29 May 2006 06:07 [Source: ICIS news]
The situation is particularly severe for general purpose PS (GPPS). Spot prices were around $1,180-1,200/tonne CFR Hong Kong/China late last week, but spot SM prices overtook those after rising to $1,200-1,220/tonne CFR China
High impact PS (HIPS) margins were being squeezed, with spot prices of around $1,230-1,240/tonne CFR China resulting in a margin of only $20-30/tonne. HIPS suppliers traditionally aim for a margin of at least $120/tonne over SM.
Several factors led to this dismal PS market, said suppliers.
The changing end-user market is an important reason. Cassette and video tapes, which use GPPS, have been replaced by CDs and DVDs which use polycarbonate (PC). The toys industry, another traditional market, is also increasingly using other plastics like polypropylene (PP).
HIPS is usually used for electronics like TVs and radios. But demand for cathode-ray TVs has declined amid antidumping duties in the ?xml:namespace>
The changing behaviour of end-users has also made it difficult to predict PS demand. With volatile crude prices pushing SM values up sharply, buyers now wait for prices to decline before making purchases instead of buying on a regular basis.
Some sources said buyers had accumulated enough material over the last few weeks and were therefore keeping to the sidelines, while others said orders for end-products had dwindled or the prices were too low to justify buying the resin.
PS suppliers were quoting higher offers this week at $1,260-1,300/tonne CFR China for GPPS and above $1,300/tonne for HIPS in an attempt to improve margins. Demand, however, remained dismal, said the traders.
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