Bearish polystyrene trend persists in China, SE Asia

Falling upstream costs continued to pull PS markets down in China and Southeast Asia this week, as per ChemOrbis. Steadily weakening spot styrene costs in Asia, which recently dipped to their lowest level in two years, has been the main driver behind this bearish trend in the downstream PS market. Spot styrene prices plunged nearly US$150/ton in two months on FOB South Korea basis. In China, a South Korean PS producer reduced import offers by US$30/ton from last week blaming weak upstream costs, market sentiment and demand. “We are facing difficulties to conclude deals. We feel that prices have some more room to lose this month,” a source at the producer said. In the local market, a B grade PS producer reduced offers by about CNY200-300/ton (US$32-49/ton) as overall demand is not encouraging and done deals are quite limited. “We reduced our operating rate to 70% recently. We believe that persistently declining upstream prices may push PS prices down further in the near term. Buyers are unwilling to purchase recently and we don’t foresee much change in demand in the next few weeks,” a source at the producer noted. “The local PS prices declined by about CNY200-300/ton week over week under the downwards pressure from unsupportive demand and costs. We don’t expect local demand to revive much even before the National Day holiday since many buyers are using recycled grades to save costs citing expensive PS prices,” a trader commented. Weak demand, ample availability and lower upstream benzene costs keep the outlook gloomy for styrene, according to traders. A Southeast Asian producer sold out allocation of 9000 tons to the region for this month before prices moved down further. They will start offering prices for October shipments next week, while the market outlook remains uncertain as styrene prices remain on a downtrend. “We may apply US$20/ton decreases but we will continue to observe styrene and crude oil prices. The revolution of shale oil has increased the US inventory which creates a pressure on crude oil prices,” a producer source said. Crude oil prices on the NYMEX have lost more than US$3.5/barrel in a week. According to ChemOrbis, “There should be vivid demand for Christmas preparations as well as the year-end this month but so far we didn’t see any sign of improvements,” mentioned a trader. A converter in Malaysia stated that their business remains a bit slow while they are purchasing on a hand to mouth basis. “We hope that prices will be reduced further in the near term,” the buyer noted. A buyer from Philippines commented that they hold sufficient inventories until October and they will keep their purchases to the bare minimum until then considering the current bearish trend. A converter in Vietnam was not interested in purchasing despite price decreases from a local producer given significant drops in styrene prices.