Asia EPS rises on buoyant SM market despite weak demand

03 July 2014 04:50 Source:ICIS News

Focus story by Clive Ong

EPS is used to make styro-foam, which is used for packaging, as well as insulation panels for roads and buildings. SINGAPORE (ICIS)--Spot prices of expandable polystyrene (EPS) in Asia continued to increase, tracking gains in feedstock styrene monomer (SM) market although demand has stayed weak, industry sources said on Thursday.

EPS suppliers hiked their offers this week by around $20-40/tonne to $1,780/tonne FOB (free on board) NE (northeast) Asia and $1,800-1,820/tonne (CFR) Asia, they said.

Prices of feedstock SM rose to an average of $1,645/tonne CFR China at the start of the week, after hovering below $1,600/tonne CFR China for the most part of May and June.

“With SM prices staying elevated, we have to indicate higher EPS prices to maintain margins,” a Taiwanese producer said.

A few buyers have so far accepted the raised offers after securing some parcels at lower prices last week.

“Over time, some buyers will accept these higher prices as some are currently surprised by sharp increase,” said an EPS trader in southeast Asia.

While prices have risen over the past two weeks, EPS demand in Asia has remained mostly lacklustre, and is unlikely to pick up strongly this month, according to some sellers.

But higher prices are inevitable due to high feedstock costs, they said.

“We have offered higher prices this week but there is limited demand at such prices,” said another Taiwanese producer.

China’s weak exports of finished goods has curbed demand for EPS from the packaging segment. Overall demand for Asia-made goods continued to be soft as economic recovery in major markets – the US and eurozone – remained patchy.

“The overall demand for EPS has not picked up significantly in China, but higher current prices reflect strong SM costs,” said a producer based in eastern China.

EPS is used to make styro-foam, which is used for packaging, as well as insulation panels for roads and buildings, with China as a key market.

Construction activities in China market are expected to slow down at the peak of the summer season, and weigh on EPS resins consumption, market sources said.

Credit and financing issues have also been curtailing infrastructure and construction activities in the country, they said.

Major EPS producers in Asia include Loyal Group, Xingda Group, Ming Dih Group, Garson Chemical and Taita Chemical.

Asia EPS and SM prices

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

By Clive Ong