09 May 2013 09:40 [Source: ICIS news]
By Clive Ong
SINGAPORE (ICIS)--Spot styrene monomer (SM) prices in Asia gained further ground this week amid active trade for May and June parcels throughout the week, market sources said on Thursday.
Prices were up by $20/tonne (€15/tonne) from last week, with May parcels being traded at $1,700/tonne CFR (cost and freight) China and June cargoes being quoted at $1,665/tonne CFR China.
Inventories along eastern China were at around 58,000 tonnes this week, lower than the pre-Labour Day holiday levels, which are in the low- to mid-70,000 tonnes.
“The inventory level in east China is lower than expected and that could be why prices are increasing again,” said a Korean trader.
“Prices for June were also higher even though deep-sea cargoes from the US and Europe are set to arrive,” said a Singapore-based trader.
Demand appeared more than adequate to soak up the deep-sea lots, dispelling previous notions of an impending price correction, market sources said.
Buying interest in the downstream styrenic resins sector showed signs of a modest revival this week, with suppliers hoping the renewed interest would gradually pick up steam in the weeks ahead.
“There is more enquiries for resins this week after months of slow demand,” said a Taiwanese resins producer.
However, demand is expected to show improve in the third quarter, during the Chinese manufacturing season for exports.
“There is some pick-up in demand for resins although it is not very strong,” said a Hong Kong-based trader.
On the macroeconomic front, the recent round of interest rate cuts by the European Central Bank, the Royal Bank of Australia and the Bank of Korea, helped boost market sentiment as they signify a strong push for economic growth.
The US and Japan central banks also announced their intention recently to keep their pace of bond-buying in a bid to spur economic expansion.
A stronger-than-expected Chinese trade data this week appeared to have overshadowed concerns about weak manufacturing activities. Germany also released upbeat industrial output data, stoking hopes that a sharp slowdown could be averted for the largest economy in the eurozone.
“The better-than-expected data this week has lifted sentiment and prompted SM traders to bet that governments will remain resolute in propping up economic growth,” another Korean trader said.
Up till mid-week, there were at least twenty deals concluded, with the bulk taking place on 8 May. Traders expect a slowdown in market activities late this week week as most market players will be attending the Asia Petrochemical Industry Conference (APIC) in Taipei, Taiwan.
SM is a liquid chemical used in the manufacturing of resins like polystyrene and acrylonitrile-butadiene-styrene, as well as in synthetic rubbers such as styrene-butadiene-rubber and styrene-butadiene-latex.
($1 = €0.76)
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