14 September 2010 10:49 [Source: ICIS news]
By Clive Ong
SINGAPORE (ICIS)--Asia styrene monomer (SM) prices - on an uptrend this week in line with strong energy futures and the high-demand season for styrenic resins in China - are likely to remain firm for a few weeks, producers and traders said on Tuesday.
Upbeat production numbers from China and Japan and a smaller-than-expected US trade deficit for the month of August fuelled optimism that the global economic recovery had gained traction, they said.
SM trades rose to above $1,150/tonne (€897/tonne) CFR (cost & freight) China on the back of strong energy futures this week, ICIS data showed. Spot SM prices bottomed out at $975/tonne CFR China earlier in mid-July, but had trended higher over the past one-and-a-half months.
“SM prices are supported by higher crude prices and there seems to be sufficient buying interest to sustain the upward momentum,” said a Chinese trader.
Demand for styrenic resins had remained firm in August and September, amid the traditional peak-manufacturing season in China, said market players, who added that the consumption of SM in recent weeks was also high.
The uptrend in SM prices was further supported by several unplanned shutdowns in the Middle East and southeast Asia, as well as current and upcoming turnarounds in the region.
In addition, the availability of excess parcels had also been limited by the closure of the US-Asia arbitrage window.
“Supply in September and October seems snug, therefore prices should be stable-to-firm,” said a producer in China.
Spot inventories along the eastern Chinese shore tanks had dropped to the mid-70,000 tonne level last week, as compared to the low-90,000 tonne level from around a month ago.
“Buying momentum in the domestic Chinese market has remained strong, so stock levels have declined in recent weeks,” said another China-based trader.
Meanwhile, market players said that they expected trade to slow in late September, because of the week-long Chinese National Day holidays in early October.
However, demand should re-emerge from mid-October, when the market re-opened, said the players.
“Demand for SM should come back from mid-October, when the downstream styrenic resins sector enters the final phase of the [peak] manufacturing season,” said a trader in Korea.
($1 = €0.78)
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