Asia PS margins squeezed by high feedstock

17 March 2008 05:45  [Source: ICIS news]

SINGAPORE (ICIS news)--Margins of polystyrene (PS) producers in Asia are increasingly being squeezed by high feedstock styrene monomer (SM) values with the spread between the two being much lower than the required $100/tonne, producers and traders said on Monday.

SM numbers had trended higher following the Lunar New Year holidays on strong energy values, while PS prices were largely stagnant amid weak end-user demand.

SM prices reached the mid-$1,400s/tonne CFR (cost and freight) China late February, at a near parity to PS prices.

General purpose PS (GPPS) values were slightly higher at around $1,440-1,480/tonne CFR China from the second half of February to March.

"The spread between GPPS and SM were much lower than the usual $100/tonne required by most producers," a trader in Hong Kong said.  

High impact PS (HIPS) prices were around $1,480-1,520/tonne CFR China during the same period, according to global chemical market intelligence service, ICIS pricing.

"In fact, the margins for HIPS were even worse, given that polybutadiene rubber (PBR) prices had soared," producers in Asia said. PBR is also used in the production of HIPS.

"Given the high PBR values, most producers will require some $60-80/tonne premium for HIPS over GPPS prices," said a trader in southern China.

However, HIPS prices were only $30-40/tonne higher than GPPS until now this year.

Sellers had targeted higher PS prices in a bid to improve margins, however most conceded that end-user demand had not picked up significantly since the end of the New Year holidays.

By: Clive Ong
+65 6780 4359

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