Volatile SM market dampens demand for Asia styrenic resins

Focus article by Clive Ong

SINGAPORE (ICIS)–Demand for styrenic resins in Asia tapered off this week as buyers were put off by volatile prices of feedstock styrene monomer (SM), market sources said on Thursday.

Suppliers of polystyrene (PS) and acrylonitrile-butadiene-styrene (ABS) increased their offers this week but buying interest dwindled as SM prices fell below $1,400/tonne CFR (cost and freight) China.

SM prices retreated after setting a record high for the year at nearly $1,500/tonne CFR (cost & freight) last week, according to ICIS data.

“The sudden change in direction of SM prices this week has dampened the mood of resin buyers,” said a resin producer in Taiwan.

A number of buyers were discouraged from committing to purchases this week, market sources said.

 “Volatile SM prices are creating havoc in the PS and ABS markets,” said a Hong Kong-based trader.

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

Margins of resin producers have also suffered as prices of resins could not keep pace with the rapid upswing in SM prices since the end of the Lunar New Year holiday.

The Lunar New Year was celebrated on 19 February, with the key China market closed for the festivities for a full week on 18-24  February.

“We are having problems managing our margins over the past two months as resin prices generally cannot match the increase in SM values,” said a producer of expandable PS (EPS) in Taiwan.

EPS is made into styrofoam, which is used for packaging, as well as insulation panels in buildings and roads.

A number of users of styrenic resins were said seeking cheaper alternatives, such as polypropylene (PP) and polyethylene terephthalate (PET) – which are trading at a discount to PS prices.

“Elevated prices of styrenic resins have made them less attractive compared to other plastics; this has added to the poor demand situation,” said a resins trader in southeast Asia.

Most resins producers were hoping that SM prices would retreat to a more manageable level of below $1,350/tonne CFR China, market sources said.

But relatively low SM stock levels along eastern China – at under 60,000 tonnes this week – coupled with some plant issues in the Middle East continued to set a floor on prices of the monomer.

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