18 April 2013 05:00 [Source: ICIS news]
Suppliers kept their offers of packaging resins largely unchanged at $1,840-1,850/tonne (€1,417-1,425/tonne) CFR (cost & freight) NE (northeast) Asia but conceded that buying interest was weak.
“While offers were mostly unchanged, buyers have become cautious given that crude oil and SM prices have fallen,” said a Taiwanese producer.
Energy futures declined to below $86/bbl while SM prices dipped to $1,650/tonne CFR China. Energy futures were above $90/bbl and SM prices in the high $1,600s/tonne CFR China for the week ended 12 Apr.
On the other hand, SM prices have been sustained by tight availability in Asia and hence did not suffer steep fall.
“The supply of SM is overall quite tight and that is providing some ballast to prices despite the downdraft this week,” said a South Korean trader.
With the commodities rout and stock market sell-off this week, sentiment turned increasingly bearish. Weak economic conditions in the US and the eurozone continued to curb demand for Asia-made goods, resulting in lower consumption of resins.
While demand for packaging resins were dampened by weak Chinese exports of finished goods, consumption of block flame retardant (FR) EPS is expected to gradually improve towards mid-year.
“The Chinese construction sector will peak towards mid-year during summer and FR resins should see a steady increase in demand,” said a Chinese EPS distributor.
The average operating rate of EPS units in China hovered around 54% in the first half of April, up from around 40% a month ago.
“While the export market for finished goods is poor and will reduce demand for packaging EPS, the construction sector will consume more FR resins,” said another producer in Taiwan.
Sellers in southeast Asia also indicated steady offers this week at around $1,850/tonne CFR. However, buying ideas appeared to have weakened, given the weak SM values.
“Major suppliers have mostly maintained their offers but buyers are less willing to consider them this week,” said distributor in southeast Asia.
EPS is made into styrofoam and is used for packaging as well as insulation panels in roads and buildings.
($1 = €0.77)
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