Asia's EPS prices drift lower ahead of Lunar New Year holidays

23 January 2014 07:45  [Source: ICIS news]

SINGAPORE (ICIS)--Asia’s prices of expandable polystyrene (EPS) resins continued to drift lower ahead of the Lunar New Year holidays in late January, said producers and distributors.

Trades in northeast Asia were heard concluded at $1,830-1,840/tonne CFR (cost & freight), down from $1,850/tonne CFR NE Asia in early January, according to ICIS data.

Demand continued to wane as buyers postponed commitments to after the holidays. EPS plants in China also reduced output or have shut for the holidays. The average operating rate of EPS units in China declined to below 30% in mid-January, compared to around 40% last month.

“Most plants will shut for the Lunar New Year as workers travel back to their own provinces,” said an eastern Chinese producer, who speculated that demand for EPS will likely pick up only in the second quarter.

The key construction sector in northern and eastern China will enter a peak season only in the middle of the year with demand for insulation panels made from EPS expected to stay weak in the near term. The lack of a significant pick-up in demand for Asia-made goods from the US and Eurozone has also dampened consumption of EPS from the packaging sector. EPS is made into styro-foam used for packaging electronic products.

Producers continued to lament the erosion of margins as feedstock styrene monomer (SM) prices remained at around $1,700/tonne CFR China.

“Our margins are squeezed as the usual spread between EPS and SM is around $180/tonne,” said a producer in Taiwan.

Weak demand for EPS was also evident in southeast Asia with distributors observing poor buyers’ off takes. Buying interest is expect to remain slow in the near term as some countries in the region will also celebrate the Lunar New Year holidays.

“End-users have high stocks as end-product demand is slow since last year,” said a distributor in Malaysia.

“Sales volumes are about half of usual these two weeks,” said another distributor based in Singapore.

A recent change in shipping regulations, which requires EPS shipped in containers to have open ventilation, is said to likely lead to an increase in transportation costs if adopted.

“The shippers told us that containers containing EPS will need to have an open top or a door open so that dangerous gas emitted by the resin will not be trapped in the container,” said another producer in Taiwan.

While it is not certain currently if the practice will be widely adopted, some producers of EPS have braced themselves for a hike in shipping costs.

By: Clive Ong
+65 6780 4359

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