Price and market trends: South Asia polystyrene exports hindered by styrene shortage

13 April 2013 15:16  [Source: ICB]

Polystyrene (PS) exports from the south Asian markets of India and Pakistan are likely to be limited in April as producers faced a severe shortage in their supply of feedstock styrene monomer (SM) through March, industry sources said.

According to sources on 1 April, Indian and Pakistan-based PS producers that are largely dependent on SM supply from a key Middle Eastern producer have had their import SM volumes affected since early February following planned and unplanned turnarounds at the supplier's SM production facility.

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South Asian PS makers propose to focus on domestic markets

"The availability of SM from the Middle East continues to be a concern, with no respite in the contractual volumes received in March. Hence exports for April, too, are likely to be very difficult," a source close to an Indian producer said.

The south Asian producers offered very limited PS cargoes for export throughout March, with some of them operating their plants at 50% of capacity for the entire month amid limited feedstock availability.

Indian producers traditionally export surplus cargoes to Europe and the Middle East, which includes the Gulf Cooperation Council (GCC) countries and the East Mediterranean (East Med) markets of Jordan, Syria and Egypt. The sole producer in Pakistan exports PS cargoes to traders and converters in the GCC countries Lebanon and Egypt in addition to wholly meeting the domestic demand.

STYRENE CONSTRAINTS

A GCC-based producer that sells a bulk of its total SM produced to the south Asian market has seen a significant reduction in its export volumes since February. One of its 550,000 tonne/year SM production lines was shut in early February for a scheduled maintenance turnaround and is expected to restart operations in the end of March. Its 500,000 tonne/year production was shut unexpectedly on 19 March because of technical issues. This led the south Asian PS producers increase their domestic list prices for March shipments to account for the tight SM supply in February.

The south Asian PS makers now propose to focus on the domestic markets in April amid falling PS prices in the Middle East markets and fluctuating SM prices in Asia.

PS prices in the Middle East markets have been declining since mid-March by more than $60-70/tonne (€47-55/tonne), following the recent plunge in SM prices in Asia.

In the week ended 29 March, ICIS data showed PS prices at $1,870-1,930/tonne CFR (cost & freight) Middle East for general purpose PS (GPPS), down by $10-30/tonne from the previous week.

The prices of high impact PS (HIPS) similarly fell to $1,970-2,000/tonne CFR Middle East for April shipments.

ME PS

SM prices in Asia have declined since mid-March and were assessed at $1,660-1,680/tonne CFR China in the week ended 29 March. Although PS prices are predicted to firm up in April, buoyed by a possible rebound in SM prices to above $1,700/tonne CFR, producers believe that they will be able to realise a better price in selling to the domestic market, amid the present trend in PS prices.

The domestic PS markets in India and Pakistan are also expected to see an upswing in PS demand from April, ahead of the peak summer season, as this is the time when PS demand from the refrigerator and air conditioner manufacturing sectors strengthens.

"It is better to focus on the domestic market at the moment, where we are assured of commanding a better price as compared to exports where we are exposed to the fluctuations in Asian SM prices," an industry source at a second production facility in India said.

According to a source close to a producer in Pakistan, the company is deciding whether to run the unit at a reduced capacity throughout April, or undertake a turnaround in late April after running at 100% capacity for a significant part of the month.

A separate source close to the Pakistan-based producer said the producer initially offered a limited volume of early April-loading cargoes and concluded deals for small quantities to the Middle East. Since the end of March it has held back shipments for the middle of April. The producer has opted to watch the SM price trend in early April before making further offers. "We don't want to take an order now for a shipment on, say 20 April. We intend to hold our offers for a week and then may be start offering once a clearer indication of SM prices emerged," the source added.


By: Veena Pathare
+65 6780 4327



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