Asia SM 2010 term discount on par with 2009 levels - end-users

02 December 2009 12:52  [Source: ICIS news]

SINGAPORE (ICIS news)--Negotiations for Asian styrene monomer (SM) 2010 contracts remain ongoing, with some finalised at similar or lesser discounts compared with 2009 levels, end-users said on Wednesday.

"Most buyers received around 1% to 1.5% discount for their 2010 terms," a Taiwan-based end-user said.

The larger buyers, who purchase in excess of 100,000 tonnes/year, could get up to a 1.5% discount, the Taiwan-based end-user added.

Another end-user said: "Most buyers would receive around $10/tonne (€6.60/tonne) or slightly less on their 2010 contracts versus $10-12/tonne in 2009."

Buyers of smaller volumes would receive lower discounts for 2010 contracts, which were heard to be around $5/tonne.

Some Middle Eastern cargoes, which reportedly fetched a 2-3% discount in 2009, now carried discounts at similar levels to Asian parcels, buyers said.

"A larger discount was given for some Middle Eastern parcels in 2009, as the sellers were new to the market. However, after establishing themselves in the Asian market, their discount had dipped to match that of Asian sellers," a buyer said.

Some end-users had secured contracts for around 70% of their total production, with the hope of purchasing the remaining 30% from the spot market, should the need arise, buyers added.

With the global economy still on the mend, end-users said they were uncertain of the strength of demand next year. As a result, some end-users had secured fewer cargoes on contract, as they might not be operating their plants at full rates in 2010.

While SM output in China and the Middle East continued to grow, suppliers were reluctant to give steeper discounts this year, buyers said.

Most buyers projected that energy values could remain below $100/bbl next year, while SM numbers could continue to hover around the $1,000-1,200/tonne level.

As a result, most suppliers were hesitant to give out larger discounts as their margins could be eroded if SM prices fall below $1,000/tonne, buyers added.

($1 = €0.66
)

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By: Clive Ong
+65 6780 4359



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