Focus article by Clive Ong
SINGAPORE (ICIS)--The fall in styrene monomer (SM) inventories along eastern shore tank in China this week appeared to have spurred buying interest, but the near-term price trend remains unclear, industry sources said on Wednesday.
Bids for spot cargoes rose to $1,215-1,225/tonne CFR (cost & freight) on Wednesday from around $1,200/tonne CFR China in the previous two sessions.
“The drop in inventories this week has spurred buying interest,” said a trader in South Korea.
Overall stocks of SM declined to 212,500 tonnes from 230,000 tonnes last week. Spot volumes dropped to 157,000 tonnes this week from 170,300 tonnes the previous week.
Buyers who were sidelined by the volatile and precipitous falls in prices ever since the Lunar New Year holidays in early February appeared to be tip-toeing back to the market.
“Sellers are now withholding offers as they see buyers emerging from the sidelines,” said a broker in South Korea.
SM is a liquid chemical used to make resins like polystyrene (PS) and acrylonitrile-butadiene-styrene (ABS) as well as synthetic rubbers like styrene-butadiene-rubber (SBR) and styrene-butadiene-latex (SBL).
Meanwhile, market participants largely agreed that near term price direction remains hard to call.
“Inventories of SM while lower this week remains above 200,000 tonnes,” said an end-user in Taiwan, alluding that prices can still come under downward pressure.
Others cited that a number of regional plants have exited their maintenance shutdowns and regional availability might increase in the near term.
However, some participants were not concerned with plants restarting as increasing supply would be counter-balanced by plants headed into turnarounds in April and May.
A number of end-users continue to expect weak prices in the near term, citing a lack of significant recovery in demand in the downstream styrenic resins sector.
“Resins buyers are still hesitant and unwilling to pick up large parcels,” said a resins producer in SE Asia.
Several traders concurred that without a substantial increase in demand for resins, any SM price uptrend may not be sustainable.