16 July 2008 04:33 [Source: ICIS news]
SINGAPORE (ICIS news)--Inventories of styrene monomer (SM) along the eastern China shore tanks have swelled above 60,000 tonnes in July on slow off takes, traders said on Wednesday.
“After dipping to a low of around 45,000 tonnes in June, slow demand from the downstream styrenic resins sector caused SM stocks to build up,” said a trader in east China.
Stocks in the eastern tanks stood above 130,000 tonnes in March this year, but the closed US-Asia arbitrage window and stable demand reduced the size of the stockpile in the second quarter.
Successive hikes in PS and ABS values in June and July dampened buying interest as moulders cancelled orders of finished products on poor returns.
Several PS and ABS producers in Asia also reduced operating rates in view of rising stocks, eroded margins from high feedstock costs and weak end-user demand. As such, consumption of SM declined.
Traders of PS and ABS said resins demand was unpredictable in the third quarter, despite the traditional manufacturing peak.
Several factors, apart from high resin prices, have cast a pall over the manufacturing sector in China.
The financial turmoil in the US and Europe, the tight credit policy adopted by the Chinese government, minimum wage laws, reduction of import and export tax rebates and perennial labour and electricity shortages across many parts of China have dampened sentiment and suppressed demand.
Suppliers of SM had also mostly cut back output at their plants, thus preventing stocks in the key Chinese market from swelling much further.
Spot prices in eastern China were around yuan (CNY)12,500-12,600/tonne ($1,833-1,848) ex-tank in mid-July, down from around CNY13,000/tonne ex-tank a month ago.
($1 = CNY6.82)
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