Asia’s EPS sellers push for higher prices despite poor demand

14 November 2012 03:44  [Source: ICIS news]

SINGAPORE (ICIS)--Producers of expandable polystyrene (EPS) resins in Asia continue to push for higher prices as margins are being squeezed by high feedstock styrene monomer (SM) costs, said producers on Wednesday.

SM prices have remained mostly at around $1,585/tonne (€1,252/tonne) CFR (cost & freight) China in November so far, while EPS prices have traded at below $1,750/tonne CFR northeast (NE) Asia, according to ICIS data.

“The current spread between EPS and SM [prices] is less than the $180/tonne producers typically seek,” said a Taiwanese EPS maker.

However, suppliers are facing difficulty in raising prices as the market is currently in a lull season. The manufacturing-for-exports season has largely ended in early October and demand for resins, including EPS, is tapering off.

Meanwhile, the onset of colder weather in northern and eastern China has also reduced demand for EPS from the construction sector. EPS is used to make insulation panels which are used in buildings and roads.

“The EPS demand from China will continue to decline for the remainder of the year as cold weather will slow down construction and infrastructure activities,” said a trader in South Korea.

The average overall operating rate of EPS units in China declined to 35% of capacity in November, down from 53% a month ago.

“We are quoting $10/tonne higher at $1,760/tonne FOB [free on board] Taiwan this week but customers refused to buy,” said another EPS producer in Taiwan.

End-users prefer to keep low inventories after having fulfilled most of the production requirements for the year.

($1 = €0.79)

By: Clive Ong
+65 6780 4359

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