21 February 2014 06:14 [Source: ICIS news]
By Clive Ong
SINGAPORE (ICIS)--Spot styrene monomer (SM) prices in Asia appear to have found support at $1,600/tonne this week after a recent plunge, with some market players bent on covering their short positions, industry sources said on Friday.
Expectations of tightening supply as the turnaround season begins for SM facilities are also buoying up prices, they said.
On 12 February, SM prices plummeted below $1,600/tonne CFR (cost and freight) China to their lowest levels since November 2012, amid a huge build-up of inventory in the key China markets over the Lunar New Year holidays, according to ICIS data.
Inventories continued to grow along the eastern Chinese shore tanks, to 293,600 tonnes this week, versus 268,000 tonnes last week, but the pressure on SM prices have somewhat eased as buyers are heard to be on the lookout for cargoes, market sources said.
SM prices have been steady at $1,600/tonne over the past two trading days, although the release of weak data on China’s manufacturing sector served as another blow to ailing market sentiment.
Investment bank HSBC’s flash purchasing managers’ index (PMI) for China in February came in at 48.3, down from 49.5 in January, signalling further contraction in the country’s manufacturing sector.
“The SM market remains steady despite some negative data out of China these two days," said a Korean broker.
SM is a liquid chemical used to make resins such as polystyrene (PS), expanded PS (EPS) and acrylonitrile-butadiene-styrene (ABS), as well as synthetic rubbers like styrene-butadiene-rubber (SBR) and styrene-butadiene-latex (SBL).
Supply is expected to tighten as a number of SM facilities in the region are scheduled for maintenance from February to April. At the same time, talk of production issues at two Middle Eastern facilities is circulating in the market, fuelling fears of scarce availability of spot SM in the near term, industry sources said.
“Perception of tighter availability has kept prices steady while the market looks for more clues,” said a Singapore-based broker.
Some traders, meanwhile, are holding on to cargoes purchased at higher prices, and are not keen to sell until the market recovers, market sources said.
Meanwhile, the downstream polystyrene (PS) and expandable PS (EPS) markets remain under downward pressure amid lacklustre demand.
With recent weak data out of China and the US, demand for Asian-made goods is expected to remain tepid into the second quarter. Consequently, styrenics demand may remain in doldrums in the near term.
“There is limited improvement so far after the Lunar New Year. A stronger pick-up might only occur in the later part of the second quarter,” a Taiwan-based resins producer said.
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