SINGAPORE (ICIS)--Asia’s styrene monomer (SM) prices declined to below $1,600/tonne on 12 February - a level held since November 2012.
The prices are on a CFR (cost & freight) basis.
Sellers appeared to still have the upper hand with the downtrend starting early week. Some traders continued to trade on the short side with these positions set up prior to the Lunar New Year holidays in early February.
“They could be forcing the market lower a bit more before we see some short covering,” said a trader in Singapore.
Besides the short interests weighing on prices, some long positions players were said to be keeping to the sidelines as their ability to add was hampered by financing.
“Long players could have reached the [limit] of their L/C (letter of credit) financing and could not significantly add to their positions currently. Hence prices could not be defended,” said a South Korean broker.
The long players continued to hold on to their cargoes with a sharp build in inventories along the eastern Chinese shore tanks over the Lunar New Year holidays. Estimates put early February total inventories at around 250,000 tonnes, with 140,000-150,000 tonnes available for spot.
The disparity between import prices denominated in dollars and domestic Chinese parcels in yuan (CNY) has disincentivised long players from selling their cargoes in the domestic market.
With local Chinese prices in eastern China hovering at around CNY11,100/tonne ex-tank, a broker remarked that it was approximately equivalent to $1,550/tonne CFR China.
With deals for March heard at $1,582-1,595/tonne CFR China this morning, there remained a price gap between import and domestic cargoes.
Besides bulging inventories, a slow pick up in performance in the downstream styrenic resins sector added to the bearish sentiment. Recent weak data out of China and the US spurred talk that the nascent global economic recovery could be in jeopardy.
Weak orders for finished goods received by Chinese moulders also raised concerns among styrenics participants that demand for polystyrene (PS) and acrylonitrile-butadiene-styrene (ABS) resins might see a repeat of the poor performance last year.
SM is a liquid chemical used to make resins such as PS and ABS as well as synthetic rubbers like styrene-butadiene-rubber (SBR) and styrene-butadiene-latex (SBL).
($1 = CNY6.06)