Asia styrenics buying interest seen weak till SM, crude stabilise

SINGAPORE (ICIS)–Asia styrenic resins buying is expected to stay weak till some stabilisation in feedstock styrene monomer (SM) and crude prices takes place, producers and sellers said on Thursday.

Producers have either reduced prices or withheld offers this week as a result of the recent rout in the SM prices that have been impacted by volatility in crude, traders and sellers added.

Spot SM prices plummeted to around $870/tonne CFR (cost & freight) China on 24 August amid crashes in global stock markets. This was more than 20% lower than prices on 14 August at $1,115-1,140/tonne CFR China, according to ICIS data.

A producer in Taiwan reduced polystyrene (PS) prices by around $50/tonne this week to $1,150/tonne CFR China. However, traders remarked that there were limited deals at above $1,100/tonne CFR China.

“Trades of PS are slow at above $1,100/tonne CFR China as buyers expect even lower prices,” said a trader in Hong Kong.

Some producers have withheld offers this week as they believe buyers will not commit until SM prices stabilize.

“The recent plunge in SM has made resin buyers cautious and it will take some time for them to come back into the market,” said a producer in south China.

Offers of acrylonitrile-butadiene-styrene (ABS) resins were also cut by $50/tonne to the low $1,300s/tonne CFR China by the producer.

Other suppliers are expected to follow with lower offers if they intend to quote prices this week.

A PS supplier in southeast quoted resins down at $1,200/tonne CFR SE Asia, similarly to weak buying interest.

“It is difficult to conclude business at $1,200/tonne in SE Asia,” the seller conceded.

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

Offers of expandable PS (EPS) were quoted lower as well at around $1,200/tonne CFR Asia, down from $1,250-1,270/tonne CFR Asia last week.

EPS is made into styro-foam which is used for packaging as well as insulation panels in buildings and roads.

Sellers expect low buying interest to persist over the next few weeks as buyers await for some stabilization in crude and SM prices.

Asia players expect SM prices to track the crude futures and performance in regional stock markets. Uncertainty remains high with SM players mostly in a wait-and-see mode.

“The sentiment in the SM market is sensitive to changes in the crude and equities market now,” said a broker in Korea.

So far no one is sticking their neck out to say which direction SM will move in the near term.

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

Focus article by Clive Ong