Upstream costs support Chinese PS market

13-Dec-10

In China, some PS deals were concluded with discounts, although in general the PS ranges do not indicate much change as per Chemorbis. The range is unchanged since sellers are not willing to offer much ground pointing to their high upstream costs. Accordingly, Asian spot styrene prices gradually gained ground from the beginning of December, gaining US$30/ton on FOB Korea basis and US$40/ton on CFR China basis. The spot styrene market recorded increases on the back of firm demand despite a steady trend for most of last week. Steadily increasing prices and not so comfortable availability pushed buyers to take positions which supported the market level for spot styrene as well as higher oil prices surpassing the US$88/bbl threshold on December 9th. In China's PS market, weak demand caused deals to be concluded with discounts from the sellers' initial offer levels as we are in the final month of the year. However, overall offer ranges for both dutiable and non-dutiable PS remained mostly steady on week over week basis on CFR China/FCA Hong Kong basis. The market remains firm despite thin demand ahead of the approaching year end and upstream costs provide ground for sellers to mull US$10-20/ton increases for the next week. Although the year end and the approaching financial book closures are likely to hamper sellers' increase targets; it is still unlikely for the PS market to record major decreases while styrene and oil prices keep their upward trend.