Asia Chemical Profile: Polystyrene

18 June 2012 00:00  [Source: ICB]

(Amends spelling of Jiangsu Luan Qingfeng New Material in table to Jiangsu Lvan Qingfeng New Material)

USES

Polystyrene (PS), a thermoplastic resin with good processing properties, is used in many applications including food packaging, ­domestic appliances, electronic goods, toys, household items and furniture.

SUPPLY/DEMAND

Demand for PS in Asia remains weak this year, with the China exports sector mostly in the doldrums. The ongoing debt crisis in the ­eurozone and the weak economic conditions in the US have curbed demand for Asia-made goods. Consequently, demand for resins, ­including PS, has been weaker than it was last year.

With the China economy itself slowing below an expected 8% growth rate this year, domestic consumption of PS is also expected to be lackluster.

Ample availability in the key China market has resulted in an average operating rate of around 60% over the past two months. Producers are operating at low rates to keep ­inventories at a manageable level.

Despite the imminent arrival of the China traditional manufacturing season for exports in the third quarter, demand for PS has shown limited signs of improvement so far.

Two new PS facilities are slated to come on-stream in June, namely, Jiangsu New Material and Jiangsu Sabron Petrochemical. These ­facilities will add 300,000 tonnes/year of supply to the market.

PRICES

Spot prices into China peaked at around $1,620/tonne CFR (cost & freight) in mid-March but have since retreated to below $1,450/tonne CFR in June, as assessed by ICIS.

Weak performance in the feedstock styrene monomer (SM) sector since April has weighed down PS values. Traders anticipate that PS prices have further downside potential in the near term as energy futures and SM numbers have declined. PS buyers are mostly keeping to the sidelines as they expect lower prices in the weeks ahead.

High impact PS (HIPS) prices have been trading at a $200-220/tonne premium over general grade PS (GPPS) this year due to elevated co-feedstock polybutadiene rubber (BR) prices. However this premium started to shrink in May as butadiene (BD) and BR prices are on the decline. The current premium of HIPS over GPPS is at $180-200/tonne.

TECHNOLOGY

PS was first commercially produced by ­polymerization of styrene feedstock in the 1930s. The two main types of polymers produced are a clear, crystal amorphous resin and an impact resin that contains varying levels of polybutadiene.

polystyreneThree processes generally used are the ­solution route, which produced low residual monomer content and high-purity polymers; the suspension route, which produces polymers of different molecular weights and can make specialty crystal and high impact grades of PS; and mass (bulk) ­polymerization, which produces resins with clarity and excellent color.

OUTLOOK

The general expectation is for PS prices to come down further as energy and SM prices remain weak. Buying interest for the resin was similarly limited as factories in China have received fewer orders for finished goods this year.

The uncertain global economic scenario continues to dampen sentiment, prompting buyers in Asia to delay purchases or buy on a need-to basis. Traders are similarly hesitant to keep high inventories, preferring to conduct back-to-back business. As a slowdown in the US and eurozone economies will have definite ramifications for Asia economies, trading of PS in Southeast Asia has also slowed in recent months. Buyers adopted a cautious stance and were hesitant to stockpile resins. Most are said to be shunning spot parcels and keeping to contract cargoes, which have been sufficient to meet production requirements. Nonetheless, some suppliers are cautiously optimistic of a rebound in demand should the economic climate improve. Since buyers have low inventories, buying momentum could emerge rather strongly if the perception sets in that things are improving.


Author: Feliza Mirasol and Clive Ong



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