Asian HIPS makers lament squeezed margins on high PBR costs

10 March 2010 03:05  [Source: ICIS news]

SINGAPORE (ICIS news)--Asian producers of high-impact polystyrene (HIPS) have been suffering from poor margins due to high prices of feedstock polybutadiene rubber (PBR), market sources said on Wednesday.

PBR (low cis) prices maintained a high plateau of around $2,500/tonne (€1,850/tonne) CFR (cost and freight) NE Asia this week, up from the low $2,000/tonne levels CFR NE Asia in January, according to data from global chemical market intelligence service, ICIS pricing.

“PBR usually makes up some 5-10% of HIPS, so the high prices of the rubber had eaten into our margins,” said a HIPS manufacturer.

Meanwhile, HIPS prices continued to stagnate between $1,500-1,540/tonne CFR China, with little improvement seen since the beginning of the year.

Suppliers said they were targeting prices of $1,600/tonne CFR China, deeming it sufficient to cover current PBR costs, but conceded that this was difficult to achieve in January and February.

The Lunar New Year holidays in February dampened trade in the key Chinese market. While demand was expected to improve in the second quarter on the back of a traditional pick up in the exports sector, HIPS values remained unchanged.

“There may be some resistance to higher HIPS values as end-users faced difficulty in passing on the costs to end-products,” said a trader in Hong Kong.

End-users could also switch to other plastics like polypropylene (PP) for certain end-products if HIPS prices increase too much, according to traders.

($1 = €0.74)

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By: Clive Ong
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