19 March 2012 04:10 [Source: ICIS news]
By Cindy Wu
SINGAPORE (ICIS)--China’s domestic styrene monomer (SM) market is expected to recover in April, on the back of a potential improvement in downstream demand and high feedstock prices, industry sources said on Monday.
Spot prices of SM declined by yuan (CNY) 70-80/tonne ($11-13/tonne) to CNY10,580-10,620/tonne ex-tank in Jiangsu on 16 March, down from CNY10,650-10,700/tonne ex-tank in Jiangsu on 9 March, according to Chemease, an ICIS service in China.
In addition, SM import prices were at $1,470-1,480/tonne (€1,117-1,125/tonne) CFR (cost & freight) China on 16 March, down by $15-35/tonne compared with prices on 9 March, according to Chemease.
“SM prices in China are expected to go on uptrend based on firm feedstock costs,” a trader in east China said at the sidelines of the third China International Styrene Industry Chain Summit on 16 March.
A producer said: “We are optimistic about the market, although we are facing cost difficulties right now. If downstream demand is unable to recover as usual, we can only reduce plant operating rates to ensure profitability.”
Demand for these downstream products typically recovers in March every year, when plants return to their regular operating levels following the Lunar New Year holiday, a market player said.
“Demand for EPS has not recovered. The current EPS operating rates are at around 48%,” a SM producer in northern China said.
“We expect EPS demand to recover in April when the weather turns warm in northern China,” he added.
EPS is mainly used in the outer-wall insulation, building construction and packaging sectors.
Operating rates at ABS and PS plants remain at around 70%, an industry source said.
“The nationwide construction of outer-wall insulation and welfare housing is expected to boost EPS demand, which is dependent on the country’s real estate policies,” said a key EPS producer in China.
China’s State Council announced plans in December to construct 7m welfare houses in 2012.
“We should be aware of possible unfavourable factors, however,” a trader said. “SM inventories have reached 130,000 tonnes in eastern China, and it remains to be seen whether the 7m of welfare houses will be constructed this year.”
($1 = CNY6.32, $1 = €0.76)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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