FocusAsian EPS producers to keep offers steady on firm SM prices

11 April 2012 09:17  [Source: ICIS news]

By Clive Ong

SINGAPORE (ICIS)--A number of Asian expandable polystyrene (EPS) producers are keeping their offers stable at $1,670/tonne (€1,269/tonne) on firm feedstock styrene monomer (SM) prices despite weak downstream demand, industry sources said on Wednesday.

"The high SM costs have squeezed our margins and we intend to hold on to our resin offers,” said an EPS maker in Taiwan.

Spot SM prices have hovered around $1,470/tonne CFR (cost & freight) China in April so far.

Producers of other styrenic resins like acrylonitrile-butadiene-styrene (ABS) and polystyrene (PS) have conversely lowered their offers since last week in view of weak regional demand.

EPS producers said that though demand is lacklustre and deals have been limited at current offers, they have decided to keep quotations steady as lower offers are unlikely to increase buying interests.

"Buyers are likely to remain non-committal even with lower prices, so there is no point in reducing offers," said a producer with plants in Taiwan and China

Demand for Asian-made EPS from the US and the eurozone is expected to remain weak in the near term because of the poor economic conditions there.

However demand from the Chinese construction sector could improve towards the middle of the year.

"The construction peak during the summer months in China will likely spur demand for EPS from the second half of May," said a producer in east China.

Despite the expected increase in demand, a resin trader in Hong Kong said China producers are keeping lower operating rates to ensure inventories are not excessively high.

The average EPS operating rate in China has hovered at around 45% since February, much lower than the usual 60-65%.

EPS resin has a short shelf life of around six months, and some makers in China have slashed prices to move their cargoes as demand has been persistently weak so far this year.

EPS is made into styrofoam which is used for packaging as well as insulation panels in buildings and roads.

 ($1 = €0.76)

By: Clive Ong
+65 6780 4359

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