Asia polystyrene slips on weak demand, lower feedstock

Asia polystyrene (PS) resin prices have fallen this week amid persistently poor demand and lower feedstock prices, said producers and traders on Tuesday.

However, some suppliers said they are expecting the emergence of some buying interest in late June, ahead of the Chinese manufacturing season for exports in the third quarter of the year.

Prices of general purpose PS (GPPS) slipped to around $1,520/tonne (€1,034/tonne) CFR (cost & freight) China on 7 June, down from $1,610/tonne CFR China a month ago, market sources said.

Prices of high impact PS (HIPS) also declined, down to $1,750/tonne CFR China this week from above $1,800/tonne CFR China a month ago, the sources added.

Weaker prices of feedstock styrene monomer (SM), which slipped below $1,400/tonne CFR China this week from $1,450/tonne CFR China a month ago, weighed on the PS market.

 “The dip in SM prices has also affected sentiment among PS players and exerted downward pressure on resin prices,” said a South Korean resins distributor.

PS prices started to show a more significant decline following the plunge in acrylonitrile-butadiene-styrene (ABS) and styrene acrylonitrile (SAN) prices last week.

 “PS prices are moving lower this week in line with the fall in ABS values recently,” a trader in Hong Kong said.

 “Some buying activity could surface in late June as end-users are expected to stock up resins for the production season,” a Taiwanese producer said.

However, the weak economic data from the US and the re-mergence of the debt crisis in the euro zone in recent weeks are casting a pall over PS business in Asia, given that the US and the euro zone are major export destinations for Chinese goods.

“With the current economic uncertainty, PS demand is expected to be affected and prices are likely to weaken in the near term,” the Hong Kong trader said.

The demand in the key Chinese market has been slow since the end of the Lunar New Year holidays in the first half of February. Trade continued to be subdued for most of March and April, although the market picked up from the second half of April.

However, the improvement in demand was short-lived as the commodities market sold off in late April, casting doubt in the global economic growth for the second half of the year.  

 “Market players are now uncertain about the economic outlook for the second half of the year, hence there is a general preference to reduce risk-taking,” said another producer in Taiwan.

As a result, trade had slowed down in the PS market with a number of traders liquidating their stocks in view of uncertain demand.

GPPS is used for utensils, toys and packaging. HIPS is used for toys, consumer electronics and office equipment.