21 August 2013 08:16 [Source: ICIS news]
SINGAPORE (ICIS)--Asia’s styrene monomer (SM) prices extended losses in the week of 19 August as a persistently weak demand in the downstream styrenic resins sector weighed down prices, market sources said.
Spot prices in the key Chinese market tumbled below $1,750/tonne (€1,313/tonne) CFR (cost & freight) China this week, down by more than $100/tonne from around $1,850/tonne CFR China in early August according to ICIS data.
“Orders for finished goods are lower than expected and hence consumption of resins is poor”, said a trader in Hong Kong.
Apart from the weak global economy dampening demand for Asia-made goods, the elevated prices of styrenic resins have also curbed demand to some degree.
“Styrenics are priced too high relative to other resins like polypropylene [PP], hence buying interest for them has stayed weak”, said another trader in Hong Kong.
Besides poor demand from the downstream sector, the uncertainty in the global market this week ahead of the US Federal Reserve minutes has also weighed on energy futures. This in turn exerted further downward pressure on SM values in Asia.
“There is some uncertainty this week as the US Fed minutes is to be released mid-week and the market is waiting to see if the Federal Reserve will taper its bond purchase in September,” said an SM broker in Singapore.
Fears of the US Federal Reserve tapering sent stock markets in India and Indonesia plunging this week with capital fleeing emerging markets.
Some SM traders, however, expect prices to rebound in the near term and they considered the recent sell-off to be overdone.
“The styrenics market should improve in September due to pre-buying activities before the long Chinese holidays in October, this should help boost demand for SM,” said a South Korean trader.
Despite expectations of strong styrenics demand, other traders pointed to higher-priced deep-sea cargoes set to arrive in Asia in September. The prices of these parcels were estimated to be in the high $1,700s/tonne CFR Asia.
Consequently, there is an expectation that some participants could try to support the market and keep prices from falling too steeply.
Buyers of SM, on the other hand, were relishing the recent price downdraft and placing lower bids to indicate their buying idea.
“I am looking to buy at under $1,700/tonne CFR and the price fall will improve margins of resins production,” said a Taiwanese resin producer.
SM is a liquid chemical used to make plastic resins like PS and ABS as well as synthetic rubbers like styrene butadiene rubber (SBR) and styrene butadiene latex (SBL).
($1 = €0.75)
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