FocusStrong demand to keep Iran PS bullish

18 July 2007 09:57  [Source: ICIS news]

By Prema Viswanathan

SINGAPORE (ICIS news)--Strong demand from the refrigerator and packaging segments are likely to keep polystyrene (PS) markets in Iran upbeat in the coming weeks, traders said on Wednesday.

PS offers into Iran surged by 4.4% or up to $70/tonne (€51/tonne) on Wednesday from ten days earlier. Offers from Korean suppliers were heard at €1,220/tonne CFR (cost and freight) Iran for general purpose PS (GPPS) and €1,240/tonne CFR for high impact PS (HIPS).

No buying indications were available, but traders said market sentiment was bullish due to robust demand and depleting customer inventories.

Rising styrene feedstock and crude values also helped boost the market, a Tehran-based trader said.

The main demand driver for HIPS in Iran was the refrigerator segment, while GPPS was supported by improving consumption in the packaging segment, a second trader said.

"Demand from these segments is set to remain strong during summer which began in May and will stretch until end-August," the trader said.

However, in the digital video disc (DVD) and housewares segments, PS demand was taking a hit from lower-priced polypropylene (PP), traders said.

Of the 154,000 tonnes/year used in 2006, 50% was HIPS, 40% GPPS and 10% expandable PS (EPS), although the EPS segment was expected to display a higher annual demand growth of 5% in 2007 compared with the 4% growth for the other two grades, said suppliers, traders and end users.

Iran's total PS capacity is only 80,000 tonnes/year, from Tabriz Petrochemical's plant at Tabriz. No expansion is on the cards until 2009, when capacity will go up to 135, 000 tonnes/year.

Rising crude and styrene feedstock prices also fuelled the recent PS price surge in Iran.

At noon on Wednesday, September ICE Futures Brent was trading at $75.70/bbl, up 17 cents on Tuesday's settlement level. Asian styrene prices rose to $1,380-1,395/tonne CFR China last Friday, up $25-30/tonne from a week ago, according to global chemical market intelligence service ICIS pricing.

Offers into Iran have been mainly from Korean suppliers, who have complied with the Iranian central bank's directive to transact all purchases in euros.

Problems over opening LCs due to geopolitical concerns over Iran's nuclear programme have also hindered trade with the country.

($1=€0.73)

By: Prema Viswanathan
+65 6780 4359

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