Waning demand plagues Asia polystyrene market

06 February 2013 07:24  [Source: ICIS news]

SINGAPORE (ICIS)--Trade remained muted in the Asia polystyrene (PS) market ahead of the Lunar New Year this weekend, said producers and traders on Wednesday.

Market activity has wound down with participants across Asia starting to exit the market. PS players expect trade to remain thin into late February.

Although demand has tapered off, PS prices have remained at record high levels. Strong performance in the feedstock styrene monomer (SM) sector has prompted PS makers to sustain resin values. SM prices have hovered above $1,700/tonne (€1,258/tonne) CFR (cost & freight) China since mid-December 2012, according to ICIS data.

“With SM prices at current levels, producers will not reduce PS prices in order to maintain margins,” said a trader in southeast Asia.

General purpose PS (GPPS) prices have stayed above $1,800/tonne CFR China since the second half of December 2012.

“Demand is very weak but lower PS prices might not necessarily increase demand as end-users are not buying at the moment,” said a trader in Hong Kong.

GPPS is used for packaging, disposable utensils and toys while high impact resins are used in consumer electronics.

Meanwhile, spot prices of expandable PS (EPS) remained at around $1,900/tonne CFR NE Asia in the week despite demand tapering off.

“We offered $1,910/tonne CFR Hong Kong this week but there is no response from buyers,” said an EPS producer in Taiwan.

EPS which is made into styrofoam for packaging continued to face poor demand from the weak Chinese manufacturing and exports sector.

“The manufacturing sector is currently in a lull and hence demand for resins is weak,” said a South Korean distributor in China.

At the same time, the current winter in China has curbed demand for EPS from the construction sector. The sector usually peaks in the middle of the year during the summer months.

While suppliers generally expect a pick-up in demand after the holiday, most expressed caution regarding the strength of the recovery, given the elevated resin prices.

“We will have to see how buyers take to the high resin prices in March as some have started to look for alternatives,” said a resin producer in China.

($1 = €0.74)

By: Clive Ong
+65 6780 4359

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