Asia polystyrene to hit fresh record highs on surging SM cost
ICIS News : 9-Jan-13 08:07
By Clive Ong
SINGAPORE (ICIS)--Spot polystyrene (PS) values in Asia look set to hit new all-time highs this week, driven by the strong prices of feedstock styrene monomer (SM), market sources said on Wednesday.
PS producers are hiking offers as they struggle to keep a healthy margin over SM, they said.
In the week ended 4 January, expandable PS (EPS) was assessed at a record high of $1,900/tonne (€1,444/tonne) CFR (cost and freight) NE (northeast) Asia, while general purpose PS (GPPS) stood at $1,850/tonne CFR China, according to ICIS.
The average price spread of PS over SM has narrowed to $50-100/tonne, with SM also trading at its highest level ever at $1,800/tonne CFR China in the same period, the data showed, amid tight spot availability of the monomer in the region.
Suppliers usually want GPPS prices to be $120/tonne higher than SM, while a workable spread between EPS and SM is pegged at $180/tonne, market sources said.
GPPS producers have raised their offers this week to above $1,900/tonne CFR China, while selling quotes for EPS were hiked to $1,960/tonne CFR NE Asia, traders said.
“SM costs are high and our margins are squeezed,” said a Taiwanese PS maker.
PS buyers, however, are posing a strong resistance to any price hike given difficulty in passing on to end-users the high resin costs, market sources said.
“Demand is likely to weaken as prices are in record territory,” said a Korean resin distributor in China.
Some users of PS were heard switching to other lower-priced resins.
“Some customers have switched from using PS to polypropylene (PP) for certain products and this trend could accelerate further if PS prices remain so high,” said a southeast Asia resin producer.
On 4 January, PP prices hovered at around $1,450/tonne CFR China, according to ICIS.
PS is used in packaging, disposable utensils, toys and cosumer electronics. EPS is made into styro-foam which is used in packaging as well as insulation panels in the construction industry.
($1 = €0.76)
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By Clive Ong
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