Mideast, south Asia PS gains on tighter supply, robust China demand

Prateek Pillai

15-Jul-2020

SINGAPORE (ICIS)–Polystyrene (PS) prices in the Middle East and south Asia have risen on the back of tighter supply amid strong demand from China.

This market condition is expected to continue as the world’s second-biggest economy rebounds from a first-quarter slump.

In the Gulf Cooperation Council (GCC) and East Mediterranean regions, spot prices on 10 July for general purpose PS (GPPS) have risen from 19 June by $70/tonne and $80/tonne, respectively, to $965/tonne CFR, their highest levels since early April.

High impact PS (HIPS) prices have risen by $60/tonne in the GCC and by $100/tonne in the East Med market during the same period to $1,050 CFR.

In south Asia, GPPS prices rose by $30/tonne in India to close at $945/tonne CFR and by $25/tonne in Bangladesh to close at $965/tonne CFR.

HIPS prices increased as well during this period by $50/tonne in India to $1,050/tonne CFR and by $55/tonne in Bangladesh to $1,060/tonne CFR respectively.

Supply in these markets has tightened as more cargoes are being sent to China, where demand is stronger.

As the Chinese economy has re-opened much earlier than the others from pandemic-induced lockdowns, its PS demand has boomed.

GPPS is used primarily for food packaging and stationary items while HIPS is used in the manufacturing of home appliances.

A number of producers in the Middle East could not keep up with the booming demand from China, with most orders involving large quantities of more than 100 tonnes.

A South Korean producer said that current Chinese demand was “too good”, while a Singapore-based producer said that “demand in China is currently better than it was before the pandemic”.

Some producers started cutting down on GPPS production in early June to focus on HIPS, which is currently more profitable.

This has meant that during the current surge in demand from China, many producers have run out of GPPS stocks while HIPS stocks have been depleted with only limited quantities remaining, and many of them have had to shift their cargoes from other countries to China.

Producers have been less willing to negotiate lower prices with buyers in the GCC and south Asia, citing China’s strong demand.

In south Asia, demand in India and Bangladesh is weak amid spiking coronavirus cases in these countries, with lockdowns re-imposed in parts of India.

Focus article by Prateek Pillai

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