04 October 2006 04:38 [Source: ICIS news]
SINGAPORE (ICIS news)--Rising polybutadiene (PBR) prices have squeezed margins of high-impact polystyrene (HIPS) in the Asia Pacific, producers said on Wednesday.
Heightened butadiene values on the back of snug supply continued to bolster PBR values this year. Manufacturers of the rubber in ?xml:namespace>
This has boosted prices of PBR to around $1,900/tonne CFR Northeast Asia in September.
HIPS typically use 3-5% of PBR for added impact strength, which translate into a cost of around $55-$100/tonne in the manufacturing of the resin.
However, current spot prices of HIPS were insufficient to maintain workable margins for HIPS, said the producer.
Normally, a spread of around $100/tonne over feedstock styrene monomer (SM) is needed to produce the general-purpose PS. For HIPS, a spread of around $155-$200/tonne is required when taking into account PBR costs.
In September, SM prices were around $1,260-$1,285/tonne CFR Southeast Asia while HIPS were around $1,370-$1,420/tonne CFR Southeast Asia. This has resulted in a spread of around $110-$135/tonne for HIPS over feedstock SM, much lower than the required $155-$200/tonne.
Looking ahead, HIPS traders said demand would remain stable-to-weak as buyers are expected to buy on a need-to basis. Sharply lower crude oil prices had dampened sentiment in the PS market and most buyers kept to the sidelines, in anticipation of further price declines.
On the other hand, PBR makers talked of potentially higher offers at $2,000-$2,050/tonne CFR Asia in the near term, due to firm butadiene costs.
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