Asia EPS offers rise $20-30/tonne on firm feedstock; demand weak

30 April 2012 09:08  [Source: ICIS news]

By Clive Ong

SINGAPORE (ICIS)--Major sellers of expandable polystyrene (EPS) resins in Asia hiked their offers by $20-30/tonne (€15-23/tonne) on the back of buoyant prices of feedstock styrene monomer (SM), even though demand has remained weak, market sources said on Monday.

Offers are being quoted at around $1,700/tonne CFR (cost and freight) NE (northeast) Asia this week.

With prices of feedstock SM at above $1,500/tonne CFR China since the second half of April, EPS resins’ makers had to increase prices to maintain adequate margins, market sources said.

“Some end-users have accepted the higher prices as demand is likely to continue to strengthen towards the middle of the year after the May Day lull,” said another EPS manufacturer in Taiwan.

EPS plants in China have continued to run at reduced capacity in April, but at a slightly higher average utilization rate of 60% in April from 50% in the previous months, industry sources said.

A seasonal pick-up in activities in the construction sector – a main downstream of EPS – boosted demand in China in April, but buying momentum has slowed down towards the end of the month, ahead of the May Day holidays.

The Chinese markets are closed for public holidays on 30 April to 1 May.

“Demand in China has currently slowed down and will probably remain weak in the first half of May,” said a producer in Taiwan.

However, end-users are now starting to find difficulty in passing on the costs of the resins to their end-products.

“At current prices, our margins are squeezed as end product prices have not increased,” said an end-user in Hong Kong.

Over the past decade, EPS prices traded at a low of $672/tonne CFR NE Asia in May 2003 and touched a peak of $1,850/tonne CFR NE Asia in June 2008, ICIS data showed.

EPS is made into styro-foam which is used for packaging as well as insulation panels in houses and roads.

($1 = €0.76)

By: Clive Ong
+65 6780 4359

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