09 March 2012 02:38 [Source: ICIS news]
By Cindy Wu
The spot prices for SM reached yuan (CNY) 10,650/tonne ($1,688/tonne) ex-tank Zhangjiagang on 8 March, compared with CNY10,380-10,400/tonne ex-tank Zhangjiagang on 27 February, according to Chemease, an ICIS service in China.
Domestic prices began rising in late February as traders were bullish about the SM price outlook and their speculative trading boosted prices.
The expectations of a recovery in downstream demand have also caused SM import prices to rise since early February, said traders.
SM import prices were at $1,480-1,510/tonne (€1,125-1,148/tonne) CFR (cost & freight)
Downstream demand from the expandable polystyrene (EPS), acrylonitrile-butadiene-styrene (ABS) and polystyrene (PS) sectors traditionally recovers in March each year, when the production rates in these sectors return to their regular operating levels after the Lunar New Year holiday, a market player said.
However, the demand from some of the downstream sectors such as EPS has yet to recover, as domestic EPS plants are still running at an average of 45-50% capacity, an EPS producer said.
“EPS demand is still weak. The demand from the outer-wall insulation [sector] has not started because it is not warm now,” an EPS producer in north
EPS is used to make outer-wall insulation in the construction of houses, but construction will not resume until the weather becomes warmer.
Downstream ABS plants are operating at around 70% capacity, down from the average 85% capacity rate seen in 2011.
The prevailing high inventory levels of ABS may also hold back the sector’s demand for feedstock SM, said ABS producers.
The situation in the PS sector is similar to that in the ABS sector, as it also has ample SM supply in hand, said PS producers.
Nonetheless, some traders are willing to buy SM now.
”Under normal circumstances, downstream demand improves in March and April, so traders around me are actively buying cargoes,” a trader in east
Domestic prices may also increase because the SM inventories at eastern
In addition, there are fewer SM imports available to meet existing demand, because import volumes in January and February fell as a result of the Lunar New Year holiday in late January.
Imports were at 300,000 tonnes for both January and February, down from 380,000 tonnes in December in 2011.
($1 = €0.76, $1 = CNY6.31)
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