Lower feedstock, lackluster demand pull down polystyrene spot prices in Asia, further declines expected

Spot PS prices continued to move lower this week in Asia triggered by lower feedstock costs and lackluster demand, as per Chemorbis. Demand for end products is not expected to pick up in the short term by processors at a time when the newer styrene capacities in China are exerting a continuous downward pressure on styrene prices. This has led to an expectation of further declines in the days to come. In China, import offers for both dutiable and non-dutiable GPPS origins witnessed declines of US$10-40/ton this week while import HIPS offers posted larger decreases of US$35-40/ton on the week. Producers offering to the Chinese market reported that they cut their prices by US$15-50/ton this week owing to poor demand, as most of them reduce operating rates to around 50% after several consecutive weeks of poor sales. Local PS prices in China posted declines of CNY150-400/ton (US$22-59/ton) on the week, with producers inside China also reporting cutting their operating rates to 50-80% of capacity in an effort to cope with the persistent lack of buying interest. Similar price declines were recorded in Southeast Asia, with import GPPS offers falling US$20-40/ton on the week. Several regional producers reported slashing their offers to the region by US$50/ton in a futile attempt to revive buying interest, while sellers offering to the region’s local markets elected to implement price cuts of US$15-73/ton in accordance with falling prices in the import market. Converters in Asia say that they are facing seasonally weak demand exacerbated by ongoing concerns regarding the health of the global economy, with most buyers predicting that the current lackluster demand conditions will remain in place through July and August. Meanwhile, a number of traders and distributors say that they have decided to suspend their PS business owing due to unsatisfactory margins. Despite depressed demand for PS, styrene production figures have escalated to new heights in Asia due to the start-up of some new capacities in China as well as the resumption of production at some existing plants in Asia. China’s Sinopec Zhenhai has reportedly reached full rates at its new 620,000 tpa styrene plant while CNOOC and Shell’s styrene plant, which recently had its capacity increased by 200,000 tpa to 760,000 tpa, is also reported to have reached full run rates after returning from their debottlenecking operation. Elsewhere in Asia, Mitsubishi has resumed operations at a 370,000 tpa styrene plant in Japan and South Korea’s LG Chem restarted a 180,000 tpa styrene following a maintenance shutdown in June. In addition, Iran’s Pars Petrochemical has reportedly resumed shipments to Asia from its 600,000 tpa styrene plant. The plant, which was originally started in March of this year, had been operating at reduced rates for the past few months.