Asia styrene climbs on feedstock, despite poor downstream

29 July 2009 05:02  [Source: ICIS news]

SINGAPORE (ICIS news)--Asia styrene monomer (SM) prices gained ground this week despite persistently poor downstream styrenic resins performance, traders and producers said on Wednesday.

Spot values in the key Chinese market had increased from $1,050/tonne (€735/tonne) CFR (cost and freight) last week to $1,095/tonne CFR on Tuesday, according to global market intelligence service ICIS pricing.

A rebound in energy values over the past week and strong feedstock benzene prices in Europe and Asia pushed SM values up. Suppliers were keen to raise prices, citing squeezed margins.

“While demand is not strong, high benzene and ethylene values had increased production costs and we need to price SM above $1,100/tonne CFR,” said a Japanese producer.

Demand for styrenic resins like polystyrene and acrylonitrile-butadiene-styrene has fallen this year due to the export slump despite the third quarter being the traditional high-peak manufacturing season.

“The financial debacle in the US and Europe last year and the current global recession have curbed demand for China-made goods,” said a trader in Hong Kong.

As a result, the Chinese export sector fared badly this year despite the Chinese central government’s efforts to mitigate falling exports by stimulating domestic demand, traders said.

While demand stayed weak, the uptrend in benzene prices in the US and Europe fuelled talk of a corresponding increase in Asian values, which could lift SM numbers further.

Benzene values in Europe rose more than 15% over a month while the US prices climbed more than 30% over the same period.

“The hike in feedstock values is likely to fuel speculation among SM players in Asia,” a Korean trader said.

As a result, spot prices could swing upwards even though demand remained poor, traders said.

($1 = €0.70)

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By: Clive Ong
+65 6780 4359

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