SINGAPORE (ICIS)--Demand for expandable polystyrene (EPS) in Asia is expected to stay soft in the near term due to a seasonal lull in the key China market amid abundant supply.Construction is a major downstream for EPS (Photo by Andy Wong/AP/REX/Shutterstock)
But regional producers were nudging up prices amid production losses, with the EPS spread over feedstock styrene mononomer (SM) at below the breakeven level of $180/tonne since late January.
On 15 March, spot EPS prices were assessed firmer week on week at $1,250-1,260/tonne CFR (cost & freight) China, according to ICIS data.
Demand in China is especially tepid due to a seasonal lull in the downstream construction sector, which will likely keep EPS production rates low in the coming weeks.
EPS is used in making insulation panels and roads.
“Chinese EPS makers are operating at around 50% now and are not like to ramp up operating rates anytime soon,” a regional producer said.
Demand in southeast Asia is comparatively better and Asian suppliers prefer selling into this region instead.
“Demand from southeast Asia is better because some food packaging producers are replenishing inventory in anticipation of the upcoming Ramadan festivities in May,” a regional distributor said.
EPS supply in the China market is also more than sufficient to meet demand at present, as Chinese end-users currently have healthy inventory levels while regional producers were reportedly operating at around 70% of capacity.
Regional producers were keeping operating rates low to stem losses as EPS’ premium over feedstock SM fell to a fresh intra-year low of $160/tonne in the week ended 8 March, ICIS data showed.
Focus article by Yaw Min Jie