Asia SM extends weekly losses as weak sentiment persists

SINGAPORE (ICIS)–Asia’s styrene monomer (SM) prices slid further in the week as sentiment remained bearish, but demand is expected to pick up in the near term due to scheduled turnarounds in the key China market.

Friday morning discussions were lower, with an offer for an April cargo at $1,320/tonne CFR (cost & freight) China.

On Thursday, SM prices were assessed at $1,335/tonne CFR China, down $30/tonne from the previous day, led by a slump in SM futures in China.

Last week, prices ended the trading week at $1,365/tonne CFR China, $65/tonne weaker than the week before.

Buyers retreated as the downward trend persisted, with sellers lowering offers in anticipation of a further drop in prices in the days to come.

Meanwhile, concerns over end-user demand added to the gloomy sentiment.

“Demand after Chinese New Year was not as good as expected,” said an SM trader.

Overall operating rates of downstream styrenic resins plants in China have been slow to recover to pre-holiday levels, falling short of expectations of a big jump in demand after the week-long holiday in China.

China was on holiday on 15-21 February for the Lunar New Year and Spring Festival.

SM inventory levels in the country climbed in the week to 105,400 tonnes, up 8,800 tonnes or 9.1% week on week.

But even with the recent sell-off, some market participants said that the market outlook was still somewhat positive as fundamentals were still supportive.

A number of turnarounds scheduled over March and April within China are expected to boost demand for imports in coming weeks. With plant shutdowns taking place in Japan, Indonesia and the Middle East as well, supply of international cargoes is likely to take a hit as well.

The pick-up in demand was expected to take place in the second quarter of the year as the manufacturing season kicks off, even if a little later than earlier anticipated.

The drop in SM prices has already encouraged more end-users to pick up additional cargoes in the spot market.

Focus article by Deborah Lee

Picture: Packing material made of styrofoam for break-proof packaging. Styrene monomer (SM) is used to produce polystyrene (PS), which is used in packaging. (Photographer: Georg Stelzner/imageBROKER/REX/Shutterstock)