Price and market trends: Asia EPS falls on weak SM market; downtrend may continue

09 June 2014 00:00 Source:ICIS Chemical Business

Expandable polystyrene (EPS) prices in Asia lost further ground and may remain under downward pressure because of weakness in the feedstock styrene monomer (SM) market, industry sources said on 28 May.

“Some sellers have quoted packaging EPS at $1,745-1,750/tonne CFR (cost and freight) Asia, down $20-30/tonne from [the previous] week,” a regional distributor said.

Prices of feedstock SM fell below $1,600/tonne CFR China for the week ended 23 May, prompting some EPS suppliers to reduce offers. Other EPS suppliers, however, kept offers steady to protect their margins. A Taiwanese producer maintained its offers at $1,765/tonne FOB (free on board) NE Asia.

China styreneDemand for EPS was largely tepid in May, after a modest pick-up seen in April. Some sellers expect buying interest to emerge in June when end-users come back to the market to replenish their inventory, industry sources said.

Suppliers are mostly quoting prices for flame retardant (FR) resins at a premium of $60-70/tonne over packaging grades. Actual fixtures in Asia, however, were heard concluded at lower premiums of around $50-60/tonne. FR resins are made into insulation panels used in buildings and roads.

Infrastructure construction has entered its peak season during May in the key China market and this should have provided a boost to the EPS market. But the pick-up in demand for resins is weaker than expected, EPS makers said. Another producer in Taiwan said: “Compared to previous years, the demand season appears weaker.”

Run rates at China’s EPS facilities are currently hovering in the low- to mid-50% levels in May, compared to the mid- to high-50% in the previous month, according to ICIS data.

EPS production rates in China typically reach 60-70% and above during peak demand season, market sources said. China’s economic slowdown amid weak exports continued to dampen demand for resins, including EPS, market sources said.

Manufacturing activity in the world’s second biggest economy has remained lacklustre, with preliminary May purchasing managers’ index (PMI) reading by HSBC showing a reading of 49.7, still below the 50 threshold that indicates expansion.

By Clive Ong