FocusAsia styrene downtrend persists

10 September 2008 08:41  [Source: ICIS news]

By Clive Ong

 

SINGAPORE (ICIS news)--Asia styrene monomer (SM) prices have remained on a downtrend in early September as persistently weak demand and lower oil values exerted downward pressure with the outlook similarly bleak, said traders on Wednesday.

 

With the imminent arrival of the week-long Chinese National Day holidays in early October, some market players believed demand for in the downstream resins sector could remain weak for the remainder of the year.

 

Financial woes in the US and a slowdown in large Asian economies like Japan and China had fuelled expectations of lower demand for oil, market sources said.  

Crude values had retreated from a record high of around $147/bbl in the first half of July to below $105/bbl in the corresponding period in September.

 

Apart from falling crude numbers, SM prices have also been weighed down by persistently poor demand since the start of the third quarter. Spot values declined from $1,640-1,685/tonne CFR (cost and freight) China in the first half of July to $1,475-1,495/tonne CFR China in the first half of September.  

 

Initially, market participants anticipated a rebound in demand post the Beijing Olympic Games at the end of August but they said buying interest had remained sedate so far.

 

The downstream styrenic resins sector has continued to see a slowdown with factories in China reporting limited orders for finished products.

 

Meanwhile, shore tank inventories in eastern China currently total around 40,000-45,000 tonnes.

 

Slow offtake from end-users despite low inventories pointed to feeble demand in the key Chinese market, sources said.  

 

“Both domestic and import prices in China remained under downward pressure,” said a trader in eastern China.

 

A deluge of cargoes from Asia and the Middle East is expected to arrive in China in late September and October.

 

“With consumption looking unlikely to pick up, the market would not be able to digest the increased availability,” said one trader based in southern China.

 

Slow demand in China has impacted producing countries like Japan and Korea. On the whole, operating rates of Japanese facilities were reported around 60-70%, while Korean units were at around 80%.

 

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By: Clive Ong
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