FocusAsia EPS declines, downtrend seen amid weak demand

08 March 2013 03:07  [Source: ICIS news]

By Clive Ong

EPS is made into styrofoam which is used for packaging, as well as insulation panels in roads and buildingsSINGAPORE (ICIS)--Asia expandable polystyrene (EPS) prices declined this week on the back of a fall in feedstock styrene monomer (SM) prices and the downtrend is expected to last amid weak demand, producers and traders said on Friday.

SM prices plunged to the low $1,600s/tonne (€1,216/tonne) CFR (cost & freight) China on 4 March amid a general sell-off in petrochemicals and commodities.

The Italian election deadlock and the US budget cuts fanned fears that the US and Eurozone economies will destabilise and reduce demand for Asian made goods. 

Offers of packaging resins were cited at around $1,860/tonne FOB (free on board) NE (northeast) Asia this week, down from $1,920/tonne FOB NE Asia last week.

“Buying interest is thin even with offers down by $60/tonne,” said a Taiwan-based producer.

End-users anticipated further weakness in resin prices and most have decided to wait and see.

Some EPS producers expect demand to remain weak for the first half of the year as the Chinese exports sector is likely to remain in the doldrums.

The premium for flame retardant (FR) resins over packaging types hovered around $70/tonne. Suppliers concede that the premium is unlikely to increase in the near term as demand on the whole is weak.

Producers of FR resins usually try to target a $90-100/tonne premium, citing rising costs of FR coatings, but poor demand has shrunk the premium to about $70/tonne.

FR EPS is made into insulation panels and is used in roads and buildings.

The construction sector in China is a key consumer of FR EPS. However,  construction activity is expected to peak only towards the middle of the year during the summer months. Hence, near term demand for EPS could remain tepid.

While sporadic deals were heard concluded at $1,850-1,860/tonne FOB NE Asia, talk of even lower prices at $1,820/tonne FOB NE Asia circulated in the market.

“We have booked a cargo at around $1,820/tonne FOB China bound for East Mediterranean,” said a distributor based in southeast Asia.

Other distributors in southeast Asia quoted packaging resins at around $1,880/tonne CFR SE Asia but reported lukewarm response from customers.

“Buyers are thinking of low $1,800s/tonne CFR SE Asia which is way below the offer,” said another SE Asia distributor.

EPS is made into Styrofoam which is used for packaging as well as insulation panels.

($1 = €0.76)

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


By: Clive Ong
+65 6780 4359



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