Asia styrenics markets feel pressure from weak SM; trades muted

Focus story by Clive Ong

SINGAPORE (ICIS)–Asia’s styrenics markets are feeling the pressure from declining prices of feedstock styrene monomer (SM) amid lacklustre trades ahead of a long holiday in the key China market, industry sources on Wednesday.

Plans of some styrenics suppliers to hike prices were quashed this week as SM prices tumbled, market sources said.

Some PS sellers in southeast Asia were initially looking at raising offers to above $1,700/tonne CFR (cost and freight) Asia but instead decided to roll over prices. Spot trades in southeast Asia were heard in the mid- to high-$1,600/tonne CFR levels.

Prices of feedstock SM drifted to around $1,500/tonne CFR (cost and freight) China this week from near the mid-$1,500/tonne levels last week on concerns over China’s slowing economy and the economic malaise afflicting the eurozone.

Weaker upstream benzene and crude markets also weighed on SM prices.

“Styrenics demand in China is waning ahead of the National Day holidays in early October”, said a Korean producer.

Demand for styrenics resins such as polystyrene (PS) and acrylonitrile-butadiene-styrene (ABS) in China has been tapering off this week as most market players prepare for the week-long National Day on 1-7 October.

Peak manufacturing-for-exports season has also mostly been completed this month, according to market sources.

“After the holidays [China’s National Day], it will be largely local Chinese demand determining the performance of styrenic resins,” the Korean producer said.

PS resins are used for packaging, toys, consumer electronics and other consumer items, while ABS resins are used in appliances, consumer electronics, as well as in the construction and automotive sectors.

“With SM prices softening again, resins buyers will delay commitments,” said a southeast Asian producer.

In recent weeks, a number resin buyers were seen buying smaller volumes in view of volatile SM prices, while others have sufficient stocks to tide them over near-term requirements, market sources said.

Overall, buyers appeared hesitant to purchase more as production requirements have dwindled, unsure of the near-term direction of styrenics prices.

“I have rolled over prices for October cargoes but so far no deals have been done,” said another southeast Asia-based resins supplier.

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