Asia PS margins squeezed by high feedstock costs

08 May 2008 08:53  [Source: ICIS news]

SINGAPORE (ICIS news)--Asia polystyrene (PS) margins are being squeezed by rising feedstock styrene monomer (SM) values, said sellers and traders on Thursday.

 

SM prices have risen more than $50/tonne to above $1,500/tonne CFR (cost and freight) China this week, on the back of record crude values and buoyant benzene numbers.

 

However, PS prices could not increase in tandem as end-user demand remained slack.

 

“Buying interest remained sedate after the Labour Day holidays and buyers were unwilling to pay higher prices for resins,” said a PS trader in Hong Kong.

 

General purpose PS (GPPS) prices were mostly around $1,520-1,530/tonne CFR China and Hong Kong, although sellers had tried to hike numbers by $30-40/tonne this week.

 

“At such prices, PS has almost no margins,” said a resins trader in China.

 

Typically PS suppliers need around a $80-100/tonne spread over SM prices for GPPS and $160-180/tonne premium over SM for high impact PS (HIPS).

 

Margins for the later had also been severely squeezed as feedstock polybutadiene rubber (PBR) values had increased unabated over the past few months.

 

HIPS sellers had targeted a $70-80/tonne premium over GPPS but could achieve no more than a $30-40/tonne difference.

 

Major producers of PS in Asia include Dow Chemical, Denki Kagaku Kyogo, Idemitsu Kosan Co, Chimei Corp and Formosa Chemical & Fibre Corp.

 

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By: Clive Ong
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