18 July 2012 10:03 [Source: ICIS news]
SINGAPORE (ICIS)--Buoyant styrene monomer (SM) prices at around $1,400/tonne (€1,134) CFR (cost & freight) China have propped up polystyrene (PS) resin values, said traders and producers on Wednesday.
PS spot prices have increased to around $1,550/tonne CFR China this week as end-users continue to replenish stocks. PS prices reached a low of $1,405/tonne CFR China in mid-June before trending higher on the back of rising SM numbers.
Tight supply in the region also helped bolster resin prices. The average PS operating rate in China has hovered at 60–70% in July, a modest increase from around 60% in June.
Demand for the resin is expected to show modest improvement in the third quarter as the manufacturing season in China kicks off. However, given the backdrop of slowing economic growth in the US and China as well as the debt crisis in Europe, overall consumption of PS is expected to be lower than last year.
“The weak global economic situation will continue to dampen demand for Asian products and consequently PS demand is also affected,” said a producer in Taiwan.
The premium of high-impact PS (HIPS) over the normal grade has shrunk in July to less than $200/tonne. HIPS spot prices were in the low $1,700s/tonne CFR China this week while normal PS prices hovered around $1,550/tonne CFR China.
The premium was at $200–220/tonne over the past few months but tepid demand for HIPS has dropped it to below $200/tonne in July.
“Slow demand for HIPS has resulted in lower premiums over the general purpose resins and this premium could shrink further as buyers prefer to buy other impact resistant resins like ABS [acrylonitrile-butadiene-styrene],” said a dealer in Hong Kong.
The price difference between ABS and HIPS has shrunk dramatically since earlier this year, prompting a number of buyers to prefer ABS. According to ICIS data, spot prices of ABS in early March were at $2,190/tonne CFR while HIPS was at $1,620/tonne CFR. This resulted in a price difference of around $570/tonne.
However, with current ABS prices of around $1,980/tonne CFR and HIPS of around $1,730/tonne CFR, the difference has shrunk to $250/tonne.
PS is a resin used in toys, packaging, disposable consumer items as well as consumer electronics.
($1 = €0.81)
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