04 January 2013 11:23 [Source: ICB]
The prices of styrenic resins in Asia remained 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 CFR China in mid-December 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 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.
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