Asian PS producers reluctant to lower prices despite weak demand

Asian import polystyrene prices firmed up in China at the low end of the overall price range by US$20/ton, for both dutiable and non-dutiable GPPS over this past week, as per ChemOrbis. However, despite the recent uptick, current offer levels continue to show negative margins for the PS producers at the low end of the overall GPPS range as they still trade below the theoretical production cost based on the most recent spot styrene prices. Meanwhile, the HIPS market indicated a mostly steady trend on a week over week basis despite the soaring butadiene costs. In the upstream markets, crude oil prices have been on a declining trend for a few days as they reached 5-week lows. The Organization of Petroleum Exporting Countries’ (OPEC) decision to raise output to 30 mln bpd coupled with reports from the US Energy department saying that US crude oil supplies declined 1.93 mln barrels have accelerated the most recent drops. However, styrene prices remained mostly stable over this past week, not reacting to these large decreases, yet. Meanwhile, Asian butadiene prices followed an opposite direction as they moved up by US$800/ton when compared to the late November levels while US$400/ton of this increase happened just within last week. Such increases were attributed to supply concerns trigged by reduced cracker operating rates in the region. Considering the latest developments in the upstream markets and the current weak PS demand ahead of the approaching financial book closings and the Chinese New Year, generally a stable trend is expected in the import GPPS market, as per ChemOrbis. However, discounts may be available on deals if oil prices do not recover and styrene prices start to react to the drops seen on energy costs. In the HIPS market, regardless of the thin demand, higher butadiene costs might push sellers to be firm with their HIPS prices. Overseas producers generally appear reluctant to lower their prices any further ahead of the impending year end. “Instead of cutting our prices, we prefer to cut our operating rates,” they comment.
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