05 June 2013 04:51 [Source: ICIS news]
By Clive Ong
SINGAPORE (ICIS)--Asia’s spot styrene monomer (SM) inched up this week, with a July fixture done at $1,680/tonne (€1,277/tonne) on concerns about tightening supply, but downward pressures remain given continued weakness in demand for downstream styrenics resins, market sources said on Wednesday.
Snug cargo availability at the onset of China’s peak manufacturing season for exports will support the market, with some traders expecting prices to find support at around $1,650/tonne CFR (cost and freight) China.
Spot prices have fallen below $1,700/tonne CFR China in the last two weeks of May, and were assessed at $1,660-1,685/tonne CFR China on 3 June, according to ICIS.
Inventories along the Chinese shore tanks have fallen, dipping to around 59,300 tonnes for the week ended 31 May, down from 73,600 tonnes in late April, industry sources said.
“Inventories in the region remained constrained and could provide support for prices,” said a Korean trader.
An impending shutdown of Lotte Chemical’s 550,000 tonne/year SM plant in Daesan, South Korea, on 9 June because of technical problems at the unit would further tighten regional supply and provide support to SM prices, market sources said.
An estimated 15,000 tonnes of lost SM production is estimated from the shutdown, which is expected to last one to two weeks, they said.
“Prices will probably move higher as some traders will cover short positions from the outage,” said another Korean trader.
But any price gains will be limited, market sources said.
Buying momentum for SM started to ease late last month, after traders had bought parcels in Asia to meet obligations.
Market attention shifted back to the weak downstream styrenic resins sector, capping SM’s price gains towards the end of May, industry players said.
“Prices of SM were on the uptrend in the first half of May as some deep sea cargoes arriving in June were said to be delayed,” said a trader in Singapore.
Resins traders expect demand to stay tepid as end-users are hesitant to stock up, following release of weak manufacturing data in the key China market.
Demand for Asian-made goods remained poor as the region’s major export markets – the US and the eurozone – are still gripped in economic malaise, dampening resins consumption.
“There is little pick-up in styrenic plastics demand so far, despite the approach of the third-quarter manufacturing season,” said a resins producer in southern China.
SM is a liquid chemical used to make plastic resins such as polystyrene (PS) and acrylonitrile-butadiene-styrene (ABS), as well as synthetic rubbers like styrene butadiene rubber (SBR) and styrene butadiene latex (SBS).
($1 = CNY6.13 / $1 = €0.76)Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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