FocusAsian styrenics prices seen flat on slow downstream demand

14 March 2012 06:38  [Source: ICIS news]

By Clive Ong

ABS is used to make toys such as plastic ballsSINGAPORE (ICIS)--Asia styrenics prices are likely to remain flat after a two-month climb amid soft demand for finished goods from Europe and the US due to weak economic conditions there, producers and traders said on Wednesday.

Demand for acrylonitrile-butadiene-styrene (ABS) and polystyrene (PS) was lacklustre because Chinese exports of finished goods remains weak as a result of poor demand in the eurozone and the US.

“Chinese factories producing finished goods usually increase output from April but so far buying interest from them is weak this year,” a resins producer in China said.

However, a number of Asian sellers conceded that demand might be less buoyant than last year as there are more economic uncertainties this year including the US-Iran nuclear standoff that is currently ongoing in the Middle East.

Also, with resin prices at elevated levels, demand is expected to take another hit.  

The run-up in PS and ABS prices since late last year has dampened consumption of these resins as buyers find it difficult to pass on the resin costs to end products.

ABS is used in the manufacturing of toys, consumer electronics as well as in the automotive industry. PS is used in the packaging, toys and consumer electronics sector.

ABS prices rose by around 15% to $2,190/tonne (€1,664) CFR (cost & freight) NE Asia for the week ended 9 March from late December 2011.

PS prices were up by around 12% to $1,620/tonne CFR China for the week of 9 March from end of December, according to ICIS data.

“Resin prices have risen significantly in January and February and end-users who secured production contracts for finished goods are finding it difficult in producing products based on current resin prices,” said a dealer in Hong Kong.

Demand for expandable PS (EPS) is also tepid with producers in China and Taiwan saddled with high inventories.

EPS is a foam plastic used for packaging and as insulation panel in the construction industry.

“Buyers are hesitant given the uncertain economic conditions in the eurozone,” said a Taiwanese producer.

Suppliers of EPS find limited outlet for their resins as demand in Europe and the Middle East has also slackened.

“There are some holidays in the Middle East so demand has been weak over the past few weeks,” said another Taiwanese manufacturer.

With EPS prices now hovering around $1,700/tonne CFR NE Asia, some suppliers concede that their customers are likely to reduce consumption.

The Chinese construction sector has not picked up so far as cold weather persists in the northern regions.

However, demand for EPS is expected to pick up towards the middle of this year when warmer weather sets in and boost consumption of insulation panels which are made from EPS resins.

($1 = €0.76)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections


By: Clive Ong
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