Asian EPS makers struggle on poor demand, rising SM costs

23 August 2012 08:56  [Source: ICIS news]

SINGAPORE (ICIS)--Asia’s expandable polystyrene (EPS) makers are struggling to increase resin prices amid weak regional demand and strong feedstock styrene monomer (SM) costs, market sources said on Thursday.

Offers for packaging grade EPS were unchanged week on week at $1,600-1,620/tonne (€1,280-1,296/tonne) FOB (free on board) Korea this week, but buying interest remains limited, they added.

Meanwhile, SM prices have increased to above $1,450/tonne CFR (cost & freight) China this week on the back of buoyant crude futures at above $97/bbl, they said.

“Our margins are squeezed by rising costs, but buyers are unwilling to accept higher resin prices,” said a EPS producer in Taiwan.

Weak exports of finished goods to Europe and US have dampened demand for EPS, which is used for packaging. The slowing Asian economies, including China’s, have reduced demand for EPS even more, said market sources.

“Demand for EPS this year is definitely much poorer than last year,” said an east China producer.

The slowdown in the Chinese economy has also resulted in weaker EPS consumption from the construction and infrastructure sectors. EPS is also used as a flame resistant insulation in buildings and roads.

“We would be happy to consider any bids at $1,600/tonne and more, but enquiries are just so few in recent weeks,” said another Taiwanese producer.

Buyers were said to have accumulated sufficient inventories in July to tide them over immediate requirements, and hence most were in no hurry to purchase more as usage remained slow.

Major EPS makers include the Loyal Group, Ming Dih Group and Taita Chemicals of Taiwan and the Xingda Group, Leasty Chemicals, Garson Chemicals of China.

($1 = €0.80)

By: Clive Ong
+65 6780 4359

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