Higher upstream costs lead to additional hikes in PS prices, globally making buyers nervous

Higher upstream costs and globally firm styrene markets have led to additional hikes in price of polystyrene (PS) over December levels, as per Chemorbis. December saw PS prices in Asia persistently lagging behind production costs when spot styrene prices rose by over US$150/ton since early December, and by more than US $250/ton in Europe. In Asia, PS sellers implemented sharp increases on their January prices mainly due to factors including surging feedstock prices, supply concerns inside China triggered by delivery disruptions due to heavy snowfalls in the north of the country, intensive maintenance shutdown schedules and lower operating rates for Q1-2010 that contributed to the strong sentiment in the region. January has begun with price increases of US$60-100/ton from regional producers, while the Southeast Asian market saw price hikes of US$40-100/ton on import PS offers to the region. The Mediterranean region saw price hikes of US$120/ton in Egypt and $160/ton in Turkey for Asian origins. In Europe, following the higher January styrene monomer settlements, which rose by €172/ton over December, Italian players reported seeing increases of €150-180/ton (US$220-260/ton) over December for spot cargoes based on rising costs and limited number of regular sources. Similarly, prompted by higher January styrene contracts, West European PS sellers came with similar price hikes to Turkey over last month. However, buyers across the global markets have been disappointed by the steeper than expected price increases post New Year Holidays. Pointing to seasonally slow end product business, most buyers and even distributors in the Mediterranean region are reported to be nervous about these increases for now. In Turkey, where there is a growing resistance from the buyers’ side, players have not reported any done deals at the new levels, while a distributor reported giving a counter bid which is €90/ton below the seller’s offer level for a West European origin. In Europe, purchases are reported to be on a needs only basis, despite buyers’ low stocks. Some converters are stating that they might reduce their operating rates instead, while some who already paid these hikes are complaining that they are quite disappointed with having to pay such large increases, highlighting that the market is not strong enough to support them to pass these hikes downstream. However, buying continued in Asia despite discontent about the noteworthy increases, as most buyers were caught in the rising trend without stocks and now have no alternatives but to make purchases at the new price levels to replenish their inventories this month. As reported earlier, demand was sluggish last month in the Southeast Asian market as most buyers in the region were on the sidelines waiting for the implementation of the ASEAN-6 Free Trade Agreement in January.