Corrected: Asia styrene price uptrend fizzles out, seen range-bound

Correction: In ICIS story headlined “Asia styrene price uptrend fizzles out, seen range-bound” issued on 11 April 2014, please read in the third paragraph… “to above yuan (CNY 11,800/tonne ex-tank”… instead of … “to above yaun (CNY) 18,000/tonne ex-tank”. A corrected story follows.

Focus story by Clive Ong

SINGAPORE (ICIS)–Asia styrene monomer (SM) prices strengthened in mid-week amid buoyant crude oil and benzene values but the trend fizzled out as more sellers offered cargoes, traders said on Friday.

Spot prices of May and June parcels rose more than $10/tonne from early week to $1,660/tonne CFR (cost & freight) China and $1,670/tonne CFR China respectively, according to ICIS data.

Domestic prices in eastern China also gained ground to above yuan (CNY) 11,800/tonne ex-tank from CNY11,700/tonne ex-tank on 4 April.

“The continuous gains in domestic Chinese prices are narrowing the price difference between domestic and import parcels. This has a positive effect on import prices,” said a Korean broker.

Domestic prices fell below CNY11,000/tonne ex-tank in the middle of February, causing the price difference between domestic and import parcels to widen to more than $100/tonne.

In March, domestic prices started to recover and the price difference between local and imported material has shrunk to less than $50/tonne in April.  

However, in the second half of the week, the price uptrend fizzled out. Selling activities were seen on the increase when prices trended higher on Wednesday.

“More sellers have emerged on Thursday after prices rose yesterday [Wednesday], ” said a Korean broker.

Consequently, prices slipped by some $10/tonne as buyers retreated to the sidelines.

“Chinese domestic prices have also eased as buyers have picked up some parcels,” said a trader in Singapore.

Relative high inventories along the eastern China shore tanks also weighed on sentiment.

Estimates this week pegged total volumes at 282,000 tonnes with spot portion at 168,600 tonnes, compared to 292,500 tonnes and 175,800 tonnes last week.

“While inventories are slowing coming down, they are still at a relatively high level,” said a Korean trader.

The slow recovery in the downstream styrenic resins sector post Lunar New Year has resulted in a gradual reduction in SM stocks.

“Demand from the styrenics sector has picked up marginally in March and April, which was insufficient to sharply reduce the SM inventories stock in the near term,” said a Taiwanese resins maker.

Market players expect prices to remain in the $1,600-1,650/tonne CFR China trading range in the near term as recent upward pushes have not been successful. The offtakes from the downstream sector remained tepid despite some slight pick up.

Meanwhile, most maintenance shutdowns at Asia plants will be completed by the second half of April, fuelling talk that availability in the region will grow. Consequently, prices could still be capped in the current range in the weeks ahead.

SM is a liquid chemical used to make resins such as polystyrene (PS) and acrylonitrile-butadiene-styrene (ABS) as well as synthetic rubbers like styrene-butadiene-rubber (SBR) and styrene-butadiene-latex (SBL).

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