HIPS sentiment slightly stronger than GPPS in global markets

In global Polystyrene markets including China, Italy and Turkey, the overall market outlook for June is bearish on the back of the weak demand and volatile upstream costs as per ChemOrbis. Global PS offers are generally softer. However, HIPS prices continue to retain their large premium over GPPS despite poor demand given the higher costs of butadiene as well as the relatively tighter supplies. Styrene costs have been following a volatile trend in May in line with the crude oil prices hovering above and below the US$100/bbl threshold. In Asia, styrene costs only shed US$10/ton on FOB Korea basis in a week, although the decrease amount reached US$90/ton when compared with the beginning of May. The same situation is also valid in the European styrene market, as FOB NWE basis spot prices indicate only a US$15/ton decrease for the week, but a US$145/ton drop with respect to the start of May. In the benzene market, Asian spot prices indicate US$120/ton decreases on FOB Korea basis while European offers lost ground by US$145/ton on CIF NWE basis when compared to the beginning of the month. However, higher butadiene costs soften these bearish influences from the benzene and styrene markets for HIPS offers as prices for HIPS face relatively smaller decreases when compared with GPPS, while they continue to carry a larger premium over general purpose PS. In Europe, an initial butadiene contract settled with €270/ton (US$384/ton) increases when compared to the May settlement. Meanwhile, May contracts had already moved up by €360/ton (US$512/ton) over April in the region. In Italy, spot PS prices were mostly reported with rollovers to €30/ton decreases when compared to early May while spot HIPS prices continue to carry a larger premium of up to €100/ton over GPPS. Meanwhile, some sellers report offering HIPS with up to a €120/ton premium compared to GPPS. This situation is due to the still snug butadiene supplies in the region despite restart of some crackers. The firmer HIPS sentiment is even more obvious for gentlemen’s agreements as GPPS contracts are mostly passing with rollovers to €15/ton increases but HIPS contracts are passing with €10-25/ton increases despite buyers’ push for rollovers. In Asia, spot butadiene prices are around US$100/ton lower FOB Korea, when compared to the previous week due to the waning arbitrage opportunities to the US. However, the most recent spot butadiene prices are still US$405-410/ton higher when compared to the beginning of May. Looking at China, both local and import PS market levels moved down during this past week due to the weak demand and softer styrene costs with players holding even further decrease expectations for June. However, despite these bearish developments, dutiable HIPS offers carry a noteworthy premium of US210-220/ton over dutiable GPPS while non-dutiable HIPS carry a US$200-230/ton premium over non-dutiable GPPS. Slightly limited HIPS supplies and the higher butadiene costs create this larger gap between GPPS and HIPS prices. In Turkey, HIPS supplies are also reported to be tight for promptly available local materials and therefore, HIPS offers remained stable over the course of last week when compared to the softer GPPS prices. Dwindling availability coupled with strong butadiene costs caused HIPS prices to avoid decreases over this past week. Therefore, despite the generally softer outlook on the PS market, locally held HIPS offers are anticipated to follow mostly a stable trend over the near term.