Asia styrenics surge on tight supply, producers seek margins

23 March 2009 04:56  [Source: ICIS news]

By Clive Ong

SINGAPORE (ICIS news)--Spot prices of polystyrene (PS) and acrylonitrile-butadiene-styrene (ABS) resin surged last week and may continue to increase due to tight availability in key Chinese market and with suppliers seeking better margins, said producers and traders on Monday.

The 15% jump in feedstock styrene monomer (SM) values in just a month to the high $800/tonne (€592/tonne) CFR (cost and freight) China levels in mid-March had squeezed margins of PS and ABS manufacturers.

This forced the manufacturers to sharply hike PS and ABS prices to obtain a workable margin.

Spot PS prices rose by some $50-80/tonne to around $1,000/tonne CFR China for general purpose (GP) PS and $1,100/tonne CFR China for high impact (HI) PS.

PS suppliers typically seek a $100/tonne spread for GPPS and a $200/tonne spread for HIPS over SM numbers.

Meanwhile, ABS numbers surged by more than $100/tonne to reach $1,300/tonne CFR China and above which surprised most buyers.  

PS and ABS prices reached their highest level this year, according to global market intelligence service ICIS pricing.

“Higher prices were inevitable as cost had increased continuously in recent weeks,” said a producer in Taiwan.

Apart from cost push, tight availability of resins in China also gave prices the impetus to increase.

“Availability is tight for PS and even more limited for ABS, therefore prices are likely to continue to escalate,’ said a trader in Hong Kong.

Supply of Korean ABS resins had been limited in China in recent weeks due to increased consumption of ABS resins in the domestic Korean market, market sources said.

Korean electronics makers had increased their consumption of ABS resins to manufacture and export the finished consumer electronic products, they said.

Exports of Korean-made electronics products had been boosted by the depreciation of the Korean won against the US dollar.

Improved domestic demand in China due to the central government’s stimulus programme also soaked up available resins.

“Prices are likely to gain further ground over the next few weeks as the tight supply is unlikely to ease quickly,” said a trader in eastern China.

Major sellers of PS and ABS into China include Chimei Corp and Formosa Chemical and Fibre Corp of Taiwan, LG Chem, Kumho Petrochemical, Cheil Samsung of Korea and Denka of Japan.

($1 = €0.74)

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By: Clive Ong
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