FOCUS: Chinese EPS demand may recover in April

27 March 2007 07:32  [Source: ICIS news]

By Clive Ong

SINGAPORE (ICIS news)--Demand for expandable polystyrene (EPS) was expected to recover in April after a weak performance in March, producers in Taiwan and China said on Tuesday.

Demand for both the packaging grade and block flame retardant grade were slack after Chinese New Year holidays in the second half of February.

The slow buyer offtake over the past month had resulted in a build-up of inventories among producers.

Operating rates among a number of facilities in China had been scaled back to around 50-60% in March, said an eastern Chinese producer. His 150,000 tonne/year facility is currently running at 60%.

Another producer who operates three lines in eastern China said he shut one line last week for two days to curb mounting stocks. However, the line had subsequently been restarted as he anticipates a recovering in demand soon.

Despite the current poor market conditions, most producers appeared optimistic that buying interest in China would emerge in the second half of April as stocks among end-users were expected to dwindle.

“Orders for finished goods are likely to arrive soon and moulders will step up production in April. This would likely boost the consumption of packaging EPS in Hong Kong and southern China,” a Taiwanese producer said.

Another Taiwanese maker agreed with the argument that when demand for injection resins improve, EPS consumption will rise in tandem.

Suppliers of block flame retardant EPS said demand from the construction sector in northern China remained in the doldrums as the cold weather had dampened building activities in the first quarter of the year.

Block EPS is used as an insulation panel in buildings, roads and other infrastructure.

However, with warmer weather setting in now, EPS sellers expected construction activities to start picking up in April.

Prices of packaging EPS had fluctuated in a narrow band of $1,420-1,450/tonne CFR (cost & freight) China and block EPS at $1,440-1,470/tonne CFR China in February and March, according to global chemicals market intelligence service ICIS pricing.

By: Clive Ong
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