24 December 2012 04:31 [Source: ICIS news]
SINGAPORE (ICIS)--The prices of styrenic resins in Asia remain on an uptrend in December, largely because of firming feedstock styrene monomer (SM) prices.
Spot SM prices rose to a 10-year high at above $1,700/tonne (€1,292/tonne) CFR China earlier this month, according to ICIS data, spurring resin producers to target firmer prices. SM prices have risen because of tight supply and speculation heard in the market.
Styrenic producers, particularly the makers of acrylonitrile-butadiene-styrene (ABS), were largely grappling with squeezed margins throughout the fourth quarter as demand for resins has weakened.
“The market is in a lull season in the fourth quarter and high prices have put off customers,” a Taiwanese resin producer said.
The end-users of ABS and polystyrene (PS) have largely fulfilled their production requirements for the year by October and the demand for resins has declined since.
However, resin producers did not lower their prices to engage customers, but instead hiked their offers almost week on week on the back of firm SM prices. This has affected trade, as buyers are in no hurry to purchase cargoes and are further put off by rising prices.
“We had no choice but to price resin values according to feedstock prices, but customers are complaining of the price hike during the current lull season,” a PS producer in southeast Asia said.
With SM prices showing continued strength, resin makers conceded that prices will likely rise despite persistently weak demand.
“Demand is unlikely to improve before the Lunar New Year in February, but prices of ABS and PS are unlikely to come down sharply either,” a South Korean distributor said.
Some suppliers did note that there was a slight rebound in demand for resins in late November. However, most were unable to confirm if the increase in demand was because of end-users replenishing their inventories or genuine improvement in the Asian economy.
“It is difficult to gauge if the recent uptick in demand is sustainable, although some data out of China in November suggests that its economy has bottomed out,” a Hong Kong-based trader.
Some resin producers remain pessimistic as they expect the weak global economic conditions to dampen demand for styrenic resins in the first half of 2013.
ABS is used to make toys, consumer electronics, appliances as well as in the construction and automotive sectors. PS is used in the packaging, consumer electronics and toys sectors.
($1 = €0.76)
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