China to regulate EPS in quake aftermath - sources

02 June 2008 06:18  [Source: ICIS news]

By Clive Ong

SINGAPORE (ICIS news)--The Chinese government plans to regulate expandable polystyrene (EPS) prices to curb speculative activities on construction-related products, market players said on Monday.

EPS is a key ingredient for the building of more than 1m temporary houses in quake-hit Sichuan province in southwest China.

EPS prices in China have surged more than yuan (CNY) 1,000/tonne ($144/tonne) over the past two weeks to CNY 15,300/tonne EXW (block flame resistant grade), after China announced the rebuilding efforts in Sichuan which required some 100,000 tonnes of EPS.

Measuring 8.0 on the Richter scale, the 12 May quake which struck southwest China, with its epicentre in Sichuan province, has claimed more than 69,000 lives to date.

The government had asked several companies under the Sinopec group to divert feedstock styrene monomer (SM) to the production of block flame resistant grade EPS.

“So far, Qilu Petrochemical in northern China and Guangzhou Petrochemical and Maoming Petrochemical in southern China had diverted cargoes to EPS manufacturers, while other companies could follow suit in short order,” an SM trader in eastern China said.

To combat speculative activities that had pushed both SM and EPS prices up sharply while allowing PS makers to maintain normal margins, SM producers under the Sinopec group weere said to be in discussion to supply SM cargoes to EPS makers at a fixed price.

“Sinopec companies could be supplying SM based on prices in first half of May’, several market sources said.

This would then require EPS makers to price resins at a correspondingly lower level.

Spot prices of SM and EPS were around CNY 11,500-12,075/tonne ex-tank and CNY12,900-13,700/tonne EXW respectively in first half of May, according to global chemical market intelligence service ICIS pricing.

By the end of May, however, prices of the two products rose sharply to around CNY13,400-13,500/tonne ex-tank for SM and CNY 15,300/tonne EXW for block flame retardant EPS.

($1 = CNY6.94)

By: Clive Ong
+65 6780 4359

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