30 January 2013 06:38 [Source: ICIS news]
By Clive Ong
SINGAPORE (ICIS)--Asia’s producers of expandable polystyrene (EPS) kept their offers steady in the week despite waning demand in the region.
Users of EPS have slowed down purchases after having some inventories to tide them over near-term production requirements. Suppliers expect buying momentum to remain weak until after the Lunar New Year holiday in mid-February.
“We have kept offers unchanged at around $1,920/tonne [€1,421/tonne] this week as styrene costs remained elevated,” said a Taiwanese producer.
Feedstock styrene monomer (SM) prices hovered in the low-$1,700s/tonne CFR (cost & freight) China, prompting EPS makers to keep resin offers at above $1,900/tonne.
With demand slowing, EPS facilities in China were kept at low operating rates. The average operating rate for EPS plants in China hovered in the low-30s%.
“Demand from the Chinese exports and construction sectors remain slow and hence consumption of EPS is to stay weak in the near term,” said another Taiwanese EPS producer.
The Chinese manufacturing and exports sector is currently in a lull and likely to show some pick-up only from the second quarter. The construction sector is also subdued currently amid the winter season. The construction sector typically peaks in the middle of the year during the summer months.
“Demand is weak so it is useless to lower prices in order to draw buyers forward. Most buyers have sufficient stocks to meet near-term needs,” said a distributor in southeast Asia.
EPS prices have reached record highs in January when prices rose above $1,900/tonne, according to ICIS data. Some suppliers have expressed their concerns that elevated prices could hamper demand for the resins this year.
With buying interest expected to remain modest this year, Chinese EPS makers have run their plants at low rates to maintain manageable inventories, given the short shelf life of EPS resins of about six months.
EPS is made into styrofoam, which is used in packaging as well as insulation panels in construction. In Asia, Chinese and Taiwanese companies dominate the market.
($1 = €0.74)Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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