27 December 2011 09:15 [Source: ICIS news]
By Clive Ong
Market players said the Asian exports of finished goods will continue to remain under pressure from the ongoing debt crisis in the eurozone and weak economic conditions in the
As a result, the demand for SM is likely be sub-par as downstream styrenic resin consumption remains soft.
The demand for SM in the first half of 2012 may continue to be weak as the usual export destinations for Asian products are being dampened by the global economic slowdown, according to a styrenic resin producer in
Styrenic resin demand is unlikely to rebound in the near term, with producers and traders preparing for a weak first quarter. “The demand for acrylonitrile-butadiene-styrene (ABS) and polystyrene (PS) show no signs of improvement,” a trader in
“The earliest possible recovery will likely be in February, after the Lunar New Year holiday in late January,” the trader added.
With the operating rates of styrenic facilities in
Other players said there may be a potential oversupply of SM inventory at the shore tanks in east
As a result, the market is likely be oversupplied by February. The inventory levels in February this year were high at around 160,000 tonnes, which subsequently halted the increase in SM prices.
The prices were at around $1,450/tonne (€1,117/tonne) CFR (cost & freight) China in mid-February, but declined to below $1,350/tonne CFR China in early April this year, according to data from ICIS.
“We are ending the year with a higher level of inventory in east
In summary, participants with a bearish sentiment over the market continue to focus on the deflationary bias that is prevailing in the economies in Europe and the
High unemployment, faltering housing prices and volatile equities markets need continuous liquidity by governments as private sector investors exit the market. Consequently, Asian exports of finished goods will likely be adversely affected again in 2012.
However, SM traders with a bullish view of the market said they predict a rebound in demand and consequently, higher prices in February next year. With low inventories of styrenic resins among most end-users, the buying momentum may pick up when the broader economy strengthens, which will spur the demand for SM.
“Currently, resin consumption is weak because of the uncertainty over the economies in the eurozone and the
“Buyers have low stock, but are postponing their purchases as orders for finished goods are limited,” the
However, the demand for styrenic resins and SM is likely to improve as well once the eurozone debt crisis eases with the implementation of some temporary measures by the EU.
The sentiment of some traders in
Others who are optimistic about the prices said there will be a few scheduled plant turnarounds, most notably in
“The total SM output in
With inflation temporarily relieving in the fourth quarter of this year, Asian countries, including
SM players are generally expecting further easing in 2012 as Asian governments hope to boost domestic demand.
However, the economies in the eurozone and the
The opportunities for the US-China arbitrage were mostly not taken up in the fourth quarter of this year.
The lack of a definitive price direction, market uncertainty and volatility recently weakened opportunistic trade.
“It is the year end and most traders are unwilling to take huge risks, especially arbitrage trades,” a second trader in
“I am not buying US cargoes even though there are some offers [because] the shipping time is too long. I can fulfil spot requirements with import cargoes or domestic parcels,” a resin producer in
If arbitrage opportunities cannot to be not taken up next year because of market instability, the availability in
For more on ABS, polystyrene and styrene, visit ICIS chemical intelligence
Please visit the complete ICIS plants and projects database
For more pricing intelligence, visit ICIS pricing
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|
Asian Chemical Connections