Global PS markets supported by upstream costs

PS prices are supported by higher crude oil and styrene costs in global markets. Looking at styrene prices in Asia, spot offers have gained US$95/ton FOB Korea when compared to the beginning of December- US$45/ton of this increase has occurred over the past week in the wake of higher benzene feedstock costs, which have gained US$80/ton from the beginning of December. Styrene prices also followed a similar trend in Europe, moving up by US$70/ton FOB NWE when compared to the start of the month, boosting players' expectations of a higher styrene contract for January in the region. Meanwhile, crude oil prices recorded an increase of over US$4/barrel since the beginning of December to reach a year-high level of US$91.51/bbl. In China, import GPPS offers for dutiable origins stand US$50-110/ton below producers' theoretical costs based on the current spot styrene prices. Players attributed sellers' inability to achieve offer levels similar to costs to weak demand as the end of year approaches. Despite seeing sluggish demand in the market, January outlook looks strong with firmer production costs helping sellers to stand their ground regarding offer levels while encouraging producers to target higher prices for next month. Apart from higher costs, PS sellers are also expecting to see improved sales in January as buyers are expected to engage in fresh purchases ahead of the Chinese New Year holiday in February. In Southeast Asia, a similar picture is observed in the PS market as demand remains discouraging but producers nevertheless find support from the year-to-date highs in styrene and crude oil prices. Despite the fact that GPPS offers lost US$20/ton on a week over week basis in the region, buyers reported being advised by their suppliers that this situation will not last long and that January offers will be higher. In Italy's PS market, most players had stepped out of the market last week ahead of the Christmas and New Year holidays after wrapping up their December transactions with €20-40/ton increases for spot business and €35-45/ton increases for gentlemen's agreements. Persistently tight supplies and normal demand coupled with higher upstream costs suggests a stronger January outlook for Italy's PS market. As a result, producers' sell ideas are indicating €80-100/ton increases from December while buyers also acknowledge that they will have to pay higher prices although they highlighted that they will try to limit the extent of the January PS hikes to the expected rise in the January styrene contract.