30 December 2008 07:22 [Source: ICIS news]
By Clive Ong
SINGAPORE (ICIS news)—Asia’s spot styrene monomer (SM) prices could trend upwards in the first half next year despite the gloomy economic outlook as the anticipated adverse impact was already factored into the recent price collapse, and supply is expected to remain tight on reduced regional output, Asian traders and producers said on Tuesday.
Regional supply has been snug since producers across Asia cut output from September in view of dwindling demand, with key producing countries like ?xml:namespace>
News that US and Middle East cargoes have been booked for Asia circulated in the market recently, prompting suppliers to believe that the production cuts have achieved a measure of success in reducing availability in Asia that would last into next year.
Some traders believed that a price rebound was likely as the anticipated effects of a sharp global downturn and the corresponding under-performance of the key China market next year were already factored into the sharp price decline in October and the first half of November, and hence further dismal economic data and news should have less impact on prices going forward.
Spot prices fell almost 70% from this year’s peak level of $1,670/tonne CFR (cost and freight) China in early July to $515/tonne CFR China in mid-November, before trending up to fluctuate between $550-590/tonne CFR China.
Meanwhile, with the prevailing sentiment now mostly negative, news or economic data that exceeds expectations by a little could provide a bump to prices.
End-users seeking spot parcels in December, who waited in vain for prices to decline every time crude values fell, reluctantly echoed the same sentiment that prices could be stable or headed for higher grounds at the start of next year.
Crude values had fallen from $49/bbl to below $40/bbl, but SM parcels below $550/tonne CFR (cost and freight) Asia remains difficult to secure, said an end-user in northeast
“My buying indications have been in the low-$500s/tonne CFR Asia for the past few weeks but prices remain firm above $550/tonne CFR Asia, despite the weakness in benzene and crude numbers,” another buyer in
The financial crisis in the
Aggressive interest rate cuts and fiscal stimulus packages implemented by the Chinese government recently failed to prevent the Chinese economy from decelerating sharply in the fourth quarter.
Market players are now bracing themselves for a protracted slowdown in demand growth next year with the Chinese manufacturing sector, in particular, hard hit by the global malaise.
However, amid the worsening economic outlook, spot SM numbers had bucked the trend to move higher recently, countering the downtrends in upstream crude oil and feedstock benzene values for more than a month, according to historical price data from global chemical intelligence services ICIS pricing.
($1 = €0.71)
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