China’s EPS plants keep operating rates low in off season

21 December 2011 11:22  [Source: ICIS news]

SINGAPORE (ICIS)--China’s expandable polystyrene (EPS) plants have cut operating rates further since early December because of weak seasonal demand, industry sources said on Wednesday.

The average operating rate has been 40–45% of full capacity since the beginning of December, while it was above 50% in November, according to data from ICIS China.

Demand from the construction sector in northern China has been sluggish because of extremely low temperatures in the region.

As a consequence, EPS sellers have seen reduced sales, said one producer in North China and producers have been cutting operating rates or shutting down plants to reduce high inventories while demand is poor.

“We are suffering losses these days because of high costs,” one major domestic EPS producer added.

He said the styrene monomer (SM) spot price is about yuan (CNY) 9,900/tonne, and the price of general grade EPS is CNY10,500–10,600/tonne, a difference of about CNY600–700/tonne, but the normal production cost of EPS is at least CNY800/tonne.

Both difficult sales and high costs have put Chinese EPS producers in a dilemma, industry sources said.

They can’t reduce prices further because of high costs, and also face difficulty in raising prices to cover losses because of extremely poor demand.

And demand will be weaker in the near term because of the upcoming Lunar New Year Holiday, market players said.

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By: Rita Wu

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