China’s EPS offers rising despite weak demand, over supply

06 March 2012 08:10  [Source: ICIS news]

SINGAPORE (ICIS)--China’s expandable polystyrene (EPS) offers are going up on high feedstock styrene monomer (SM) costs despite weak demand and oversupply, market sources said on Tuesday.

General-grade material was offered at yuan (CNY) 11,600-11,700/tonne ($1,838-1,854/tonne) EXW (ex-works) on 6 March while fire-proof grade material was offered at CNY12,400-12,500/tonne EXW, according to Chemease, an ICIS service in China.

The offers are much higher to the prices on 29 January, the first trading day after the Lunar New Year holidays, at CNY11,000-11,200/tonne for general purpose EPS and CNY11,800-12,000/tonne for fire-proof materials.

However, trading volume is small because buyers have previous stocks and downstream demand is poor, a market source said.

EPS is principally used as outer-wall insulation in northern parts of the country, accounting for around 45% of domestic demand.

Domestic EPS plants on an average are running at a low operating rate of 45-50%, slightly higher than the past few weeks, but still lower than normal levels of around 60%, a major producer in China said.

Both producers and traders are also expecting a demand recovery from the middle of the month when construction industry starts activity amid warmer temperatures in the northern areas of the country.

Spot SM prices rose to $1,520-1,525/tonne CFR China on Tueday on the back of tightened supply and speculation, up from $1,420-1,440/tonne CFR China in late January.

Several SM plant turnarounds in the region during March and April and the lack of arbitrage cargoes from the US has kept availability in Asia snug.

Additional reporting by Clive Ong

($1 = CNY6.31)

By: Rita Wu

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