FocusAsia polystyrene to hit fresh record highs on surging SM cost

09 January 2013 08:07  [Source: ICIS news]

By Clive Ong

SINGAPORE (ICIS)--Spot polystyrene (PS) values in Asia look set to hit new all-time highs this week, driven by the strong prices of feedstock styrene monomer (SM), market sources said on Wednesday.

PS producers are hiking offers as they struggle to keep a healthy margin over SM, they said.

In the week ended 4 January, expandable PS (EPS) was assessed at a record high of $1,900/tonne (€1,444/tonne) CFR (cost and freight) NE (northeast) Asia, while general purpose PS (GPPS) stood at $1,850/tonne CFR China, according to ICIS.

The average price spread of PS over SM has narrowed to $50-100/tonne, with SM also trading at its highest level ever at $1,800/tonne CFR China in the same period, the data showed, amid tight spot availability of the monomer in the region.

Suppliers usually want GPPS prices to be $120/tonne higher than SM, while a workable spread between EPS and SM is pegged at $180/tonne, market sources said.

GPPS producers have raised their offers this week to above $1,900/tonne CFR China, while selling quotes for EPS were hiked to $1,960/tonne CFR NE Asia, traders said.

“SM costs are high and our margins are squeezed,” said a Taiwanese PS maker.

PS buyers, however, are posing a strong resistance to any price hike given difficulty in passing on to end-users the high resin costs, market sources said.

“Demand is likely to weaken as prices are in record territory,” said a Korean resin distributor in China.

Some users of PS were heard switching to other lower-priced resins.

“Some customers have switched from using PS to polypropylene (PP) for certain products and this trend could accelerate further if PS prices remain so high,” said a southeast Asia resin producer.

On 4 January, PP prices hovered at around $1,450/tonne CFR China, according to ICIS.

PS is used in packaging, disposable utensils, toys and cosumer electronics. EPS is made into styro-foam which is used in packaging as well as insulation panels in the construction industry.

($1 = €0.76)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Clive Ong
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