Asia styrenics prices may peak after recent run-up

07 April 2009 04:43  [Source: ICIS news]

SINGAPORE (ICIS news)--Asian spot prices of polystyrene (PS) and acrylonitrile-butadiene-styrene (ABS) could peak after a big run-up over the past month and may even come down if local demand in China drops, traders and producers said on Tuesday.

“The Chinese market tends to slow down ahead of a major holiday, and hence buying momentum could ease in the second half of April,” said a trader in Hong Kong.

Most end-users will likely have accumulated sufficient stocks by H2 April to tide them over the Chinese Labour Day holidays in early May.

Spot values of high-impact (HI) PS and ABS had gained more than 20% over the past month with brisk domestic demand in China. ABS prices had reached $1,400/tonne (€1,050/tonne) CFR China while HIPS reached $1,250/tonne CFR China, traders said.

While the government-sponsored consumption in the local market had been strong over the past two months, sellers of PS and ABS were uncertain how much longer the buying interest for consumer electronics -- which uses HIPS and ABS -- could last.

“The duration of the local Chinese demand is difficult to forecast, and traders are likely to sell off their resin stocks to lock in profits,” said a resin producer selling into China.

Traders were cautious in procuring more resins, preferring to liquidate their current stocks at a profit before committing to new orders.

Resin producers in China were similarly hesitant to ramp up production, as most do not want to swamp out demand with excess supply. As a whole, output rates for PS and ABS remained around 70% in China.

The cautious stance by the market players is to be expected, given that the Chinese export sector demand remained in the doldrums.

“Once the local demand wanes, prices could weaken as the export sector may not be able to pick up the slack,” said another dealer in Hong Kong.

The export sector was expected to recover after the Labour Day holidays, but the extent of the rebound remained uncertain.

($1 = €0.75)

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By: Clive Ong
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