Asia PS drifts lower on weak styrene market, poor demand

Focus story by Clive Ong

SINGAPORE (ICIS)–Asia polystyrene (PS) prices continued to drift lower as a dearth of demand and poor performance in the upstream styrene monomer (SM) sector weighed on the market, traders said on Friday.

Suppliers have lowered offers for PS this week by $10-20/tonne, but demand remained lacklustre, indicating that prices could fall some more, they said.

Offers of general purpose PS (GPPS) were heard in the low-to-mid $1,700s/tonne CFR (cost & freight) China while high impact resins (HIPS) were quoted at around $1,800/tonne CFR China.

After an uptick in April, buying momentum for resins have tapered off in May, according to PS sellers.

With upstream SM values slipping below $1,600/tonne CFR China this week, buyers expect a further downdraft in resin prices.

Some of them have postponed purchases on hopes of securing cheaper parcels, market sources said.

Chinese export of finished goods remained in doldrums, while larger plastics moulders reported a modest increase in orders for end-products in the third quarter.

“While our orders have picked up for July, they are still below the levels of previous years,” a  source at a major south China-based plastics moulder said.

Medium-and-smaller sized moulding firms, however, reported a minimal increase in orders. Continued slowdown in manufacturing activities in China has dampened sentiment. Resin traders expect the Chinese exports sector to continue struggling in the near term.

“It is difficult to forecast when things will be better, but so far demand for PS remains lacklustre,” a Hong Kong-based trader said.

Investment bank HSBC released its preliminary May purchasing managers index (PMI) for China that showed a reading at a five-month high of 49.7. But the figure remains below the 50 threshold, which indicates expansion.

PS is used for packaging, toys, consumer items and electronics.

Prices of expandable PS (EPS) are also under downward pressure, with no significant improvement in Chinese exports.

EPS resins are made into styro-foam and used in the packaging, as well as infrastructure sectors.

Suppliers have reduced EPS offers by $20/tonne to around $1,760/tonne CFR Asia this week but buying interest remained thin.

“The recent volatility in SM prices has made buyers hesitant to commit,” said a Taiwanese producer.

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