Price and market trends: Asia styrenics demand to stay weak amid volatile SM market

09 June 2014 00:00 Source:ICIS Chemical Business

Demand for polystyrene (PS) and acrylonitrile-butadiene-styrene (ABS) resins in Asia has stagnated in May, with no imminent pick-up seen as manufacturing activities in the key China market remained tepid, suppliers and traders said on 30 May.

ABS trades were heard in the low-$1,900/tonne CFR (cost & freight) China levels, while PS prices were hovering in the low-$1,700/tonne CFR China levels, market sources said.

Volatility in the regional prices of feedstock styrene monomer (SM) has also been weighing down on the PS market, traders said. SM prices fell below $1,600/tonne CFR China on 20 May and have stayed weak since, according to ICIS.

Asia EPS“The recent swings in SM has made some buyers of resins hesitant to commit; some prefer to wait as they expect SM prices to fall more and drag down PS and ABS values,” said a resins maker in SE Asia. Most buyers and traders are maintaining low resins stocks given expectations of poor demand that could go on for months.

“There is no catalyst to lift demand unless the government unleash some form of economic stimulus,” said a resins producer in southern China.

Recent data from China – the world’s second biggest economy – continued to indicate weakness in industry output, while the fragile recovery in the US and eurozone suggests that demand for Asian made goods will stay weak, market sources said.

Most Asian economies are reliant on exports for growth.

“Orders for finished goods for exports are down more than 10% this year,” said a user of PS and ABS in southern China.

Buying momentum for styrenics has failed to sustain the uptick seen in April, and this condition is likely to pervade for the rest year, market sources said.

Lacklustre demand has kept regional facilities operating at low rates. Estimates of average run rate for PS and ABS were around the low-70% levels in China, according to ICIS data.

“Resin facilities in Taiwan are operating at around 60% only,” said a Taiwanese resins maker.

China is also dealing with domestic credit issues that dampens market activity.

“Traders are also not able to secure the amount of financing they were able to previously as credit curbs have been put in place,” said another producer in Taiwan.

By Clive Ong