FocusAsia SM market pauses after 5% slump; may resume downtrend

14 March 2013 05:46  [Source: ICIS news]

By Clive Ong

Asia SM market pauses after 5% slump; may resume downtrendSINGAPORE (ICIS)--Spot styrene monomer (SM) prices in Asia appear to be taking a breather from sharp falls this week, but could resume their downtrend in the near term as supply will grow long when turnarounds at regional plants are completed, industry sources said on Thursday.

Prices are hovering at above $1,650/tonne (€1,271/tonne) CFR (cost and freight) China, after shedding about 5% from the start of the year and hitting a low of $1,610/tonne CFR China on 4 March, according to ICIS.

“With Asian and Middle Eastern facilities completing their maintenance by May, and [the] Taixing Xinpu Chemical [SM plant] start-up in late April, Asia SM supply will be growing in the second quarter,” said a Korean trader.

China will get fresh SM supply late next month, with the start-up  Taixing Xinpu Chemical’s 320,000 tonne/year plant.

On the other hand, no imminent recovery in demand is expected as the US and eurozone economies are still weak, dampening sentiment in the overall petrochemical markets.

SM traders were seen liquidating cargoes, expecting consumption of downstream styrenic resins to decline, in line with the continued weakness in demand for Asian-made products.

After falling to the low $1,600/tonne CFR China levels early this month, SM prices appeared to have found solid footing at above $1,650/tonne.

“Some speculators are covering their short positions, which is sustaining prices this week,” said a Korean trader.

Some end-users were also heard bidding for cargoes, providing further support to the market.

But this market consolidation may be fleeting as demand from downstream styrenic resins sector remained lacklustre, some market players said.

Prices of plastics are still on a downtrend, with traders keen on liquidating stocks.

Expectations remains that resins demand will stay soft on dismal exports of finished goods by China – a key SM market.

“Plastics demand could remain poor in the near term as the US and European economies remains weak,” said a resin producer in southeast Asia.

Talks of deep-sea SM parcels from the US and the Middle East flowing into Asia further weighed on market sentiment.

“If demand does not improve, then additional supply from deep-sea and plant restarting could once again exert downward pressure on prices,” said a southeast Asia-based trader.

SM is a liquid chemical used to make plastic resins such as polystyrene (PS) and acrylonitrile-butadiene-styrene (ABS), as well as synthetic rubbers such as styrene-butadiene-rubber (SBR) and styrene-butadiene-latex.

($1 = €0.77)

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

By: Clive Ong
+65 6780 4359

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