FocusAsia styrene tumbles on weak demand, oil

07 October 2008 04:48  [Source: ICIS news]

SINGAPORE (ICIS news)--Asia styrene monomer (SM) spot prices continued to tumble, down 6% in the past week, as the deepening credit woes in the US and Europe threatened Chinese exports, said traders on Tuesday.

 

China, a key importer of SM feedstock for downstream styrenics markets, may post slower economic growth in the quarters ahead as its major re-export destinations – the US and Europe – face protracted financial and economic problems.

 

Spot SM prices declined to around $1,250-1,260/tonne FOB (free on board) Korea this week, from $1,330-1,345/tonne FOB Korea just before the Chinese National Day holidays, according to global chemical market intelligence service ICIS pricing.

 

SM prices tracked the decline in crude values, which fell below $90/bbl overnight on concerns demand will weaken amid a global recession.

 

Demand for the monomer continued to languish as consumption of styrenic resins had slowed down since July this year.

 

Resin producers of acrylonitrile butadiene styrene (ABS), expandable polystyrene (EPS) and polystyrene (PS) were largely operating at reduced rates as off-takes had slowed down in the third quarter and expectations of slower demand in the fourther quarter permeated the market, said traders.

 

“Demand for SM is unlikely to improve in the fourth quarter as it is the traditional lull season,” said a trader in Korea.

 

Most factories in China manufacturing toys, consumer electronics and computer peripehrals would have concluded business for the year by October, the traders added.

 

“Orders for finished goods from the US and Europe have been limited with the Chinese moulders since the Beijing Olympics,” said a resin trader in Hong Kong. Most traders believed that Chinese manufacturing activities for exports had largely ended for the year.

 

Meanwhile, additional supply of SM from the Middle East was expected to arrive in China in late October and November, which in turn could exert further downward pressure on prices in Asia, traders said.

 

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ICIS Copyright © Reed Business Information 2009

Author: Clive Ong
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