Asia’s EPS prices hover at year’s high despite poor demand

07 November 2012 08:30  [Source: ICIS news]

SINGAPORE (ICIS)--Asia’s expandable polystyrene (EPS) prices have been sustained by a rebound in feedstock styrene monomer (SM) prices, said producers on Wednesday.

Prices of EPS reached a high of $1,760/tonne (€1,373/tonne) CFR (cost & freight) China in the second half of October and have since fluctuated around that level, according to ICIS data.

A tight supply in the SM sector has pushed prices above $1,600/tonne CFR China this week, from the high-$1,500s/tonne CFR China for the week ended 2 November.  

Weak demand in the region has failed to weigh on EPS prices as suppliers quoted offers based on SM prices.

Demand for the resin is expected to taper off further in the near term.With the onset of colder weather in northern and eastern China, construction activities have slowed down. This has resulted in lower demand for EPS, which is used as insulation panels in roads and buildings.

“Certain northern cities have seen snowfall recently and construction demand for EPS will continue to wane,” said a Taiwanese producer.

Several producers have kept offers stable at around $1,750/tonne FOB Asia this week, but they conceded that it was difficult to conclude business.

End-users were keen to keep low inventories as demand is expected to stay weak till the remainder of the year. Hence, buying interest continued to weaken this week.

The average operating rate of EPS in China dropped to 39% for the week ended 2 November, down from around 55% a month ago, as facilities lowered output on poor demand.

“There is difficulty in raising prices as demand is poor but prices could not fall also as SM is increasing,” said a Chinese producer.

Demand for EPS has been weak in the second half of this year as the Chinese export sector was impacted by weak economic conditions in the US and the eurozone.

“The weak demand for EPS is unlikely to improve for the remainder of the year as we are now in the lull season,” said a separate Taiwanese producer.

EPS is made into styro-foam which is used in packaging as well as insulation panels in roads and buildings.

($1 = €0.78)

By: Clive Ong
+65 6780 4359

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