FocusAsia PS to stay weak near term on soft demand, poor SM market

05 March 2014 02:44  [Source: ICIS news]

Focus story by Clive Ong

PS is used in packaging, toys, disposable utensils, consumer items, as well as in electronics.SINGAPORE (ICIS)--Spot polystyrene (PS) prices in Asia lost further ground this week, with continued weakness likely in the near term amid poor demand and a lacklustre performance in the upstream styrene monomer (SM) market, industry sources said on Wednesday.

PS prices tumbled to around the mid-$1,700/tonne CFR (cost & freight) China levels from the high-$1,700/tonne CFR China levels in late February, as sellers tried to entice buyers with lower offers.

But buyers are hesitant to book cargoes as they expect prices to drift lower, with cost of feedstock SM hovering at below $1,600/tonne CFR China, market sources said.

“There is no improvement in demand and most sellers have reduced resin prices again this week,” a Taiwan-based producer said.

With the Chinese exports sector still in a lull and credit conditions staying tight, trade for PS is expected to stay slow into the second quarter.

“There is limited potential for a pick-up in demand until the later part of the second quarter,” a Hong Kong-based traders said.

Demand for resins in the key China market typically strengthens in May and June, ahead of the seasonal pick-up in manufacturing-for-export activities in the country in July to October.

However, with the nascent global economic recovery showing uneven progress, some Asia PS sellers expect demand to stay soft in the near term as buyers keep purchases small to maintain manageable inventories.

PS is used in packaging, toys, disposable utensils, consumer items, as well as in electronics.

Meanwhile, prices of expandable PS (EPS) also receded this week, with sellers hoping to engage buyers with lower prices.

EPS is made into styro-foam used for packaging, as well as insulation panels in buildings and roads.

“We have not made an offer yet this week but prices are declining as other sellers have reduced offers,” said a Taiwanese EPS producer.

Spot EPS prices were heard at around $1,750/tonne CFR NE Asia, around $10-20/tonne lower than the previous week.

China’s EPS plants have been operating at reduced capacity of under 40% on average since February, with some units in the northern regions likely to have difficulty resuming normal  production amid the cold weather.

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Clive Ong
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