Asia PS trades remain subdued despite lower offers

By Clive Ong

SINGAPORE (ICIS)–Trading in the Asian polystyrene (PS) market remained subdued this week as buyers are not keen to stock up on the resins towards yearend, notwithstanding lower offers from suppliers, market sources said on Thursday.

Offers were largely cited at $1,790-1,800/tonne (€1,325-1,332/tonne) CFR (cost and freight) China and Hong Kong this week, they said.

“Producers have reduced list prices by $20-30/tonne this week but demand is still weak,” said a Taiwan-based producer.

Traders continued to move some material at around $30-40/tonne below the producers’ offers, with most of them keen to reduce inventories in view of weak demand in the near term.

Most end-users producing finished goods for exports have completed manufacturing for the year and are inclined to keep low inventories, hence, demand for PS could stay low up to end-2013, market sources said.

Tumbling prices of feedstock styrene monomer (SM) prompted the cuts in PS offers, market sources said.

SM prices fell below $1,650/tonne CFR China in the first half of November from around $1,780/tonne in early October, according to ICIS data.

“Traders [of PS] are liquidating stocks to reduce inventories and to turn stocks into cash, which is usual during the year end,” a Hong Kong-based trader said.

Some producers expect a pick-up in buying interest in late December and early January, as buyers tend to stock up resins ahead of the Lunar New Year holidays.

The Lunar New Year falls on 31 January 2014.

“Usually users who want to run their plants during the Lunar New Year will build up some stocks several weeks before,” a southern China-based producer.

Some traders, however, believe that pre-Lunar New Year buying activities will be weaker than expected, given the tepid global economic outlook.

“We are hopeful for a rebound but it seems unlikely this time round because global economic outlook remains poor,” said a trader in China.

While producers are generally cautiously optimistic of some pre-buying activities before the Lunar New Year, most continued to manage their inventories judiciously.

“We are keeping close watch on our inventories and hoping not to have too much excess as demand is still uncertain,” a southeast Asian producer said.

($1 = €0.74)

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