Styrene and derivative PS prices moving in opposite directions

5. February. 2010
Chemorbis

In Asia, the spot markets for styrene and derivative PS are moving in opposite directions this week, with spot PS prices moving lower across the region even as spot styrene has moved higher, with spot styrene prices regaining this week all of the ground they had lost during the previous week.

The spot styrene market has been subject to some significant price volatility over the past two weeks. Spot styrene prices, which began the last week of January priced at around $1320/ton on FOB Korea basis, shed $70/ton over the course of the week to be reported at around $1250/ton with the same terms by the end of last week after they sunk to as low as $1240/ton during the week.

Sources accounted for the decline in prices by pointing to such factors as weakening demand in China ahead of the Chinese New Year holidays, the Chinese government's ongoing efforts to tighten monetary policy and lower crude oil costs. Despite the continued weakness in China's demand as the holidays draw ever closer, spot styrene prices have bounced back up this week, regaining the $70/ton lost last week to be reported as of this morning at around $1320/ton FOB Korea.

This rise in spot styrene prices has been accompanied by a recovery in the crude oil market, with crude oil futures on the NYMEX gaining approximately $4/barrel on the week. In addition to the effect of stronger crude prices, the styrene market has also received support from the fact that traders are actively bidding for March cargoes, with most players in Asia having shifted their focus to March as little market activity is expected to transpire in the region now that the Chinese New Year is only one week away.

Although styrene feedstock costs have returned to the levels seen at the beginning of last week, spot PS prices have moved lower in the region as sellers have reduced their prices in the face of lackluster demand. The largest price decreases have been recorded inside China, where distributors have cut their prices for both GPPS and HIPS by around CNY200-600/ton ($29-88/ton) this week, pointing to sluggish demand as well as their mounting sales pressure as the reasons for their price reductions.

Overseas producers offering to the Chinese market have also voiced complaints of poor demand and rising sales pressure this week, although these producers are generally taking a firm stance on their offers for the present owing to high production costs and limited availability.

In Southeast Asia, a global producer announced a price reduction of $20/ton on their offers for Singaporean PS this week, pointing to poor demand as the reason for their price cuts, while distributors in Indonesia also announced reductions of $20/ton on their offers this week in hopes of speeding up their sales.

Other sellers in the region are said to be more willing to discuss discounts with their customers, although converters say that they are in no rush to replenish their stocks right before the Chinese New Year holidays, with many claiming that their existing inventory levels can last them for the rest of the month.