Asia styrene rises above $1,400/tonne on buoyant crude futures

17 July 2012 09:01  [Source: ICIS news]

SINGAPORE (ICIS)--Buoyant crude futures at above $88/bbl (€71) bolstered Asian styrene monomer (SM) values to above $1,400/tonne this week but actual trades are being limited by a cautious sentiment in the market, traders said on Tuesday.

In the past two weeks, spot SM prices were hovering in the mid-to-high $1,300/tonne CFR (cost and freight) China levels, according to ICIS.

Only a few deals were concluded so far, traders said.

In May and June, a number of traders had incurred heavy losses because of the extreme volatility of the SM market, industry sources said.

“The losses have prompted traders to adopt a cautious stance and hence SM prices have only reacted modestly to the crude increase,” said a Korean trader.

Meanwhile, slowing economic growth in the US and China also weighed on the SM market in Asia, with demand expected to remain tepid despite the start of the third-quarter peak manufacturing season in China.

Demand in downstream styrenic resins sector has only improved marginally in July as a number of end-users replenish stocks.

“Demand for styrenic resins will likely be lower than last year overall unless the Chinese government starts stimulating the economy,” said a resins trader in Hong Kong.

Consequently, SM demand is expected to show only modest improvement in the third quarter with major economies struggling, and the eurozone still engulfed in a debt crisis.

“With downstream resins market still performing weakly, demand for SM will likely stay soft even though there could be a spurt of buying to replenish stocks in the near term,” said a Taiwanese SM buyer.

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

($1 = €0.81)

By: Clive Ong
+65 6780 4359

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