FocusAsia EPS prices fall to lowest point in ’10, drop to continue

24 June 2010 07:46  [Source: ICIS news]

By Clive Ong

SINGAPORE (ICIS news)--Asian expandable polystyrene (EPS) prices have fallen to their lowest level this year and the downtrend could continue in the near term due to weak market sentiment and poor demand, producers and traders said on Thursday.

Spot prices of packaging grade resins in the key Chinese market fell below $1,200/tonne (€972) CFR (cost & freight) this week, from around $1,430/tonne CFR at the beginning of the year, according to ICIS data.

Despite the decline, sellers anticipate that resin prices could have further downside potential as there were no signs of a pick up in demand, said market players.

“Demand continues to wane as concerns over the eurozone debt crisis, [which is] threatening global recovery, weighed on sentiment”, said a producer in Taiwan.

Furthermore, weak feedstock styrene monomer (SM) prices on the back of increased supply could not prop up EPS values.

Spot prices of SM dipped below $1,050/tonne CFR China this week, according to ICIS data.

“End-users anticipate that EPS prices could fall further in view of weak SM values, hence, buying interest remains thin”, said another Taiwanese producer.

A number of EPS producers in China were stuck with high inventories as buying momentum had slackened since May, said resin traders, who added that those producers could not lower their operating rates much further as they had contracted to buy large volumes of feedstock SM.

Current operating rates in China were estimated around 55–60%, according to the traders.

"Suppliers are under inventory pressure as the shelf life of EPS is about six months, so with limited avenue to ship out of Asia, most are cutting prices to sell into China," said a trader in Hong Kong.

Producers sought to export EPS resins to the US, Europe and the Middle East but most reported a general lack of interest from buyers there, traders said.

“If the output rate at the EPS units was lowered, the producers would be saddled with SM stocks, hence, they have to keep output at a certain rate,” said a trader in Hong Kong.

($1 = €0.81)

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By: Clive Ong
+65 6780 4359



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