Asia SM values likely to continue fall after recent tumble

24 May 2010 05:30  [Source: ICIS news]

SINGAPORE (ICIS news)--Asia styrene monomer (SM) prices are likely to continue a downward trend after falling last week due to weak energy prices, poor sentiment and the eurozone debt crisis, traders and producers said on Monday.

“The outlook remains uncertain and prices could weaken even more,” a producer in China said.

SM prices erased gains for the year after falling more than $100/tonne (€80/tonne) last week. Spot prices in the key Chinese market fell below $1,100/tonne CFR (cost and freight), to reach levels last seen in November 2009, according to data from global market intelligence service ICIS pricing.

In ICIS pricing's last report for 2009, values ended at around $1,220/tonne CFR China in mid-December. It peaked at around $1,350/tonne in late January 2010 and from February to April, the prices had hovered around $1,250-1,300/tonne CFR China.

The decline in SM prices came largely in May, in line with the global fall in equities and commodities pricing. Spot prices fell below $1,100/tonne CFR China, a decline of about $180/tonne in two weeks.

The ongoing debt woes in the eurozone had dampened sentiment among Chinese players as the crisis could derail demand for products that are made in China. Already, a number of factories in the country had reported a reduction or cancellation of orders from Europe, traders said.

“If the eurozone issues remained unresolved, then the Chinese export sector would be negatively affected and demand for SM would weaken”, a Chinese trader said.

While inventories along the eastern shore tanks in China had decreased to below 60,000 tonnes - the lowest level this year - market players’ attention were centred on potentially weaker demand due to problems in the eurozone.

“The market is not paying much attention that stocks in Chinese tanks had declined over the past four weeks and have reached the lowest level this year,” said a Korean trader.  

Meanwhile, the sharp price sell-off in recent weeks had enticed several end-users to pick up parcels last week.

“With major buyers stepping into the market, it could signal that prices may reach a low soon”, said another Chinese trader.

($1 = €0.80)

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Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Clive Ong
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