Asian styrene buoyant on crude rebound but risks remain

11 June 2012 10:26  [Source: ICIS news]

SINGAPORE (ICIS)--Spot styrene monomer (SM) prices in Asia rose to the high-$1,200/tonne (€960/tonne) levels on Monday, in line with strong gains in energy futures, but downside risks remain, market sources said.

Prices increased from around $1,250/tonne CFR (cost and freight) China on Friday, although trading was thin, with players in a cautious mode.

“The global markets and energy prices have been volatile recently and any new development out of the eurozone could destabilise the SM market again," said a trader in Korea.

Crude futures prices increased by more than $2/bbl on Monday morning on news that Spain managed over the weekend to secure up to €100bn ($125bn) in bailout funds for its banks.

Volatility in the SM market has caught a number of players in some bad trades.

SM prices came off from a high of around $1,515/tonne CFR China reached in the second half of April, shedding 17.5% in less than two months, according to ICIS.

“Some Chinese entities might have trouble issuing letter of credits for purchases made earlier at higher prices,” said another Korean trader.

Talk of potential failures by some counter parties have also curbed trades as participants sought clarity on the positions they have before entering the market again.

Meanwhile, lacklustre performance of downstream styrenic resins sector is also weighing in on the SM market.

Demand for resins like polystyrene (PS) and acrylonitrile-butadiene-styrene (ABS) remains weak despite the approach of the Chinese traditional manufacturing season for export.  

SM is liquid chemical used to producer plastic resins like polystyrene (PS), acrylonitrile-butadiene-styrene (ABS) as well as synthetic rubbers like styrene-butadiene-rubber (SBR) and styrene-butadiene-latex (SBL).

“We have little appetite for spot SM purchases as demand for resins remains weak, said a Taiwanese resins maker.

The ongoing debt crisis in the eurozone and weak economic conditions in the US continue to dampen demand for Asian-made goods.

($1 = €0.80)

By: Clive Ong
+65 6780 4359

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