FOCUS: Poor styrenics demand weigh on China SM

19 March 2007 08:54  [Source: ICIS news]

By Clive Ong

 

SINGAPORE (ICIS news)--A dearth of demand for styrenic plastics such as polystyrene (PS), expandable polystyrene (EPS) and acrylonitrile-butadiene-styrene (ABS) post-Chinese New Year are weighing on styrene monomer (SM) prices in China, said traders and producers on Monday.

 

Plastics traders had anticipated a revival in demand after the festive season ended in late February but buying interest for resins remained lacklustre. This was because some end-users had booked material to arrive after the holidays and were not keen to purchase fresh material.

 

Some resin traders said a recovery in PS, EPS, ABS and unsaturated polyester resins (UPR) would only be possible after the second half of April when inventories among end-users were expected to have dwindled.

 

“End-users have sufficient inventories and these stocks would probably last them until mid April,” said a resins trader in Hong Kong.

 

Other traders, however, said the resin market would once again enter a lull in early May due to the Labour Day holidays before picking up in the later part of the month ahead of the traditional manufacturing season in China, which typically straddles the months of June to October.

 

End-users also cited limited orders for finished goods so far, with most expecting orders to start trickling in from mid April. Resin suppliers had to seek alternative avenues to sell material due to the current weak Asian demand. This also exerted downward pressure on feedstock SM values in China.

 

Spot SM domestic prices were traded at yuan (CNY) 11,400-11,500/tonne ($1,474-1,487/tonne) ex-tank in mid-March, down (CNY) 250-300/tonne from levels at (CNY) 11,650-11,700/tonne ex-tank on 1 March, according to global chemical market intelligence service, ICIS pricing.

 

There was also a build up in shore tank inventories estimated at around 70,000 – 80,000 tonnes, an increase from an average of 50,000 tonnes for February, traders said.

 

“Demand for SM is currently weak as the downstream styrenic plastics consumption is still poor,” said a trader in eastern China.

 

At the same time, deep-sea arrivals from the US had lengthened supply and dampened prices. Trader estimates pegged total arrivals from March to May at around 200,000 tonnes.

 

In southern China, prices recently also took a beating from a supply overhang.

 

Producers had slashed prices by (CNY) 300/tonne last week to (CNY) 11,600-11,650/tonne ex-works (EXW) in a bid to stimulate interest. Prices in early March were around (CNY) 11,850-11,900/tonne EXW.

 

The outlook, however, appears brighter in the second quarter. A spate of turnarounds during March to June in Japan, South Korea and China is expected to tighten regional supply by the middle of the quarter.

 

Excess inventories in eastern and southern China are also expected to be reduced when the downstream styrenic plastics sector enters the seasonal peak period in June, traders said. 

 

($1 = CNY 7.74)

By: Clive Ong
+65 6780 4359

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