FocusAsia EPS under pressure from weak demand, falling SM values

23 May 2012 08:59  [Source: ICIS news]

By Clive Ong

SINGAPORE (ICIS)--Spot prices of expandable polystyrene (EPS) in Asia have remained under downward pressure from continued weakness in upstream styrene monomer (SM) market and softening demand, market sources said on Wednesday.

Offers of packaging resins were around $1,600-1,630/tonne (€1,264-1,288/tonne) CFR (cost and freight) NE (northeast) Asia this week, down by about 5% from early May, but there is not much buying interest, they said.

Spot EPS prices were assessed at $1,660-1,690/tonne CFR NE Asia in the week ended 18 May, down $40/tonne week on week, according to ICIS.

Prices of feedstock SM, on the other hand, have declined to around $1,360/tonne CFR China this week, down by more than 9% from early May, ICIS data showed, amid a flaring up of concerns over the eurozone debt crisis.

The eurozone’s debt crisis, as well as Greece’s political instability, has triggered sell-offs in the global equities and commodities markets in recent weeks.

“Customers [of EPS] are lobbying for parcels below $1,600/tonne, with some indications at around $1,550/tonne,” said a producer in Taiwan. Most sellers reported limited deals done this week.

Weak economic conditions in the US and the eurozone are expected to continue curbing demand for Asian-made goods.

EPS is used for packaging of food and consumer electronics.

China’s economic slowdown is also cooling off its property sector, which is a major end-user for EPS. Suppliers of the resins anticipate that consumption of block flame retardant resins for insulation panels used in buildings could decline.

“The slower property sector in China will put a dampener on EPS this year,” said a Hong Kong-based distributor.
While few suppliers have quoted prices below $1,600/tonne CFR NE Asia, some conceded that prices will have to decline if sellers wanted to engage customers.

“Definitely, there will be limited buying interest at $1,600/tonne CFR NE Asia and above. Most buyers are looking at around $1,550/tonne,” said another Taiwanese producer.

Major EPS makers in NE Asia include Taiwan’s Loyal Group, Ming Dih Group and Taita Chemicals as well as Wuxi Xingda Foam Plastics, Leasty Chemicals and Garson Chemicals in China.

($1 = €0.79)

By: Clive Ong
+65 6780 4359

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