28 October 2013 00:00 [Source: ICB]
Imports also dampen sentiment while end-users cheer price decline, hoping demand will rise with lower resins prices
Spot styrene monomer (SM) prices in Asia fell below $1,700/tonne (€1,258/tonne) this week on bearish sentiment ahead of the expected demand lull in downstream styrenics sector next month, traders said on 17 October.
The prior week, prices were being quoted in the low- to mid-$1,700/tonne CFR (cost and freight) China.
SM prices have started to drift lower, in anticipation of softening demand, with market players deeming the near-$500/tonne SM-benzene price gap too much.
Benzene is the raw material for SM production.
On 17 October, benzene was $1,245-1,263/tonne FOB (free on board) Korea.
“The margins for SM remain very wide, and lower prices would return the market to a more normal spread,” an SM user said.
In July this year, the SM-benzene price spread reached around $600/tonne. This has narrowed to below $450/tonne following recent correction in SM prices.
High SM prices have propped up resins prices to record levels this year that hurt demand, as resin buyers sought to buy cheaper alternatives.
“The decline in SM is good for the resins market. We hope that demand for resins will improve when prices come down,” said a PS maker in China.
“The price decline in SM is overdue and resins prices need to be lower in order to sell,” said a resins producer based in India. Talk of deep-sea lots, ex-US, bound for Asia in December also dampened sentiment and exerted downward pressure on prices.
Although the volume expected to arrive is not big, additional supply to the market during the seasonal lull in demand will aggravate the pressure on prices.
“The total volume to arrive in December is likely to be less than 50,000 tonnes, but December is a traditionally weak month for SM,” said a Singapore-based trader. Other traders estimated a much lower volume of around 30,000 tonnes, but prices in Asia appear to be under severe downward pressure nonetheless.
SM is a liquid chemical used to make resins such as PS and ABS as well as synthetic rubbers like styrene-butadiene-rubber (SBR) and styrene-butadiene-latex (SBL).
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