Asia PS sellers cut Philippines supply amid port congestion

Clive Ong

10-Jul-2014

Focus story by Clive Ong

SINGAPORE (ICIS)–Asia polystyrene (PS) sellers are reluctant to sell to the Philippines because of port congestion in the capital Manila and fewer cargoes are expected to be moved there in the near future as the situation is expected to persist for some time, market sources said on Thursday.

A ban on trucks in Manila’s major roads since February to ease heavy traffic in the city has choked the flow of imported chemical containers from the seaports to warehouses.

The local government of Manila disallowed eight-wheeler trucks that weigh more than 4,500 kg to drive on the roads of the capital during morning peaks hours of 5:00-10:00 hours and evening rush hours of 17:00-21:00 local time.

With little improvement expected in the near term, Asia sellers to the Philippines reported that vessels are now less willing to transport resins to Manila, given the expected jams and delays.

With the delay at the ports, local prices of PS resins have climbed steadily over the past months to trade at a significant premium to imported parcels.

Local general purpose PS (GPPS) were heard trading at $1,950/tonne DEL while high impact PS (HIPS) changed hands at around $2,050/tonne DEL, compared to GPPS prices at $1,780/tonne CFR (cost & freight) SE (southeast) Asia and HIPS prices at around $1,810/tonne CFR SE Asia respectively.

“The port delays have caused port clearance time to extend to 2-3 weeks compared to 2-3 days previously,” a producer in SE Asia said.

A resin seller in the Philippines said: “Some vessels have turned away with cargoes yet to be discharged after being delayed for an extended time at the ports.”

On top of logistical issues, the Philippines government intends to impose a requirement for independent inspection of imported cargoes at the ports in their fight against corruption.

“The requirement is for suppliers to get an independent surveyor to inspect and verify their cargoes,” said another resin producer in SE Asia.

The inspection, initially set to kick in on 1 August, is expected to add around $30/tonne cost for an average shipment to the Philippines, suppliers in SEA said.

However, several market sources indicated that the implementation date has been pushed back although most participants expect the rule to be in force eventually.

“Currently, there are several difficulties in selling to the Philippines and some sellers have turned their attention to other markets in Asia while waiting for the situation to improve,” said a trader in southeast Asia.

PS is a resin used for packaging, toys and consumer electronics as well as a host of consumer items.

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