Asia styrene demand recovers after China holidays

13 October 2009 04:42  [Source: ICIS news]

SINGAPORE (ICIS news)--Spot styrene monomer (SM) prices in China posted a strong rebound above the key $1,000/tonne level, triggered by buoyant crude oil prices after the SM market re-opened on 9 October over a week after the start of the National Day holidays, said traders and end-users on Tuesday.

Spot SM prices soared to $1,010/tonne CFR (cost and freight) China after slipping below $950/tonne CFR China before the National Day holidays.

Sentiment was bolstered when US light crude futures rose above $73/bbl on Monday and feedstock benzene climbed above $750/tonne FOB (free on board) Korea post-holidays. The positive sentiment added to the upside, with Chinese buyers coming into the market on fears that prices could be heading higher in the near term.

SM prices extended gains during early week trade as buyers with prompt requirements provided firm support. A producer sold two November parcels at $980/tonne FOB Korea while an inter-trade emerged at $1,010/tonne CFR China.

Prior to this week’s price rebound, market participants were unsure of the strength of the post holiday demand.

“Volatile energy values and a typically slow fourth quarter also added to the uncertainty,” said a trader in Korea.

“Bids were placed as low as $900/tonne CFR China during the holiday week”, said a broker in Singapore.

However, when the Chinese market reopened on 9 October, bids rose sharply with fixtures concluded around $960/tonne CFR China.

While SM spot prices had gained ground over the past two sessions post holidays, a number of participants remained sceptical of the sustainability of the uptrend.

“The fourth quarter is usually the slow demand season and supply of SM in Asia remains ample, so it is unclear if prices could keep going higher”, said a producer in China.

Some traders on the other hand, said that rising crude oil could propel SM prices higher despite the tepid seasonal demand for petrochemicals.

“With energy values potentially rising above $80/bbl by the end of the year, petrochemicals prices including SM could receive a boost to increase further”, said a trader in eastern China speculating on the potential upside in the crude futures markets.

($1= €0.68)

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By: Clive Ong
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