Asia EPS under pressure amid soft demand, weak upstream market

SINGAPORE (ICIS)–Spot expandable polystyrene (EPS) prices in Asia are coming off, and may decline further in coming weeks if both upstream values and demand fail to recover, market participants said on Thursday.

Offers this week for October-shipment supplies of packaging grade EPS from northeast Asia have slipped below $1,400/tonne CFR (cost and freight) China, down by more than $100/tonne from two weeks ago. 

At the end of trade on 29 September, before the key China market closed for an extended stretch, packaging EPS resins had settled in the $1,500-1,520/tonne CFR China, based on ICIS data.

China was on holiday from 1-8 October for National Day and Mid-Autumn Festival celebrations. Taiwan, a major EPS supplier in the region, was also closed for Double-Ten celebrations from 7-10 October.

Even if offers had fallen, “demand had not risen”, a China-based EPS trader said.

Market players said that although trade in China had resumed on 9 October, there was hardly any buying interest detected.

Most end-users were understood to be already adequately stocked with earlier purchases, and have no plans either to build inventories moving into the year-end period, when EPS off-take is seasonally slower.

To add to sellers’ woes, upstream prices have slumped, further dampening sentiment among potential EPS buyers.

According to ICIS data, feedstock styrene monomer (SM) had weakened sharply in the last few weeks, losing nearly 14% to hit under $1,250/tonne CFR China. In early September, SM had changed hands at as high as $1,440/tonne CFR China.

As expectation of further losses in SM is high, EPS buyers are staying at bay from fresh purchases now, as they anticipate offers to drop further should SM continue to weaken.

“It is a vicious cycle,” an EPS maker said.

As long as demand for EPS does not improve, it may lead to reduced production, industry players said. This will, in turn, chisel away EPS makers’ demand for feedstock SM, which will then put SM prices under even greater pressure.

EPS resins are used in manufacturing of foam packaging boxes, as well as insulation panels for housing and roads.

Focus article by Lim Ai Teng

Pictured above: Expandable polystyrene (EPS) is used in packaging and insulation. (Source: WestEnd61/REX/Shutterstock)