Will higher styrene costs be able to lift PS market in China?

18-Mar-14

In China, the PS market was on a bearish note as overall polymer demand remained weak and forced sellers to concede to discounts in order to conclude deals, as per ChemOrbis. However, despite bearish sentiment regarding PS prices, styrene feedstock gained ground when compared with early March levels and also when compared with the previous week. The increase on styrene cost is at US$50/ton from early March levels and at US$15/ton on a week over week basis. Yet, the increases on styrene feedstock costs failed to boost PS demand. Some PS producers in China elected to reduce their operating rates amidst weak demand. A producer noted, “We reduced our operating rates to 80% for GPPS and to 50-60% for HIPS in the face of thin buying interest. The reason for the higher operating rates in our GPPS line is stemming from the relatively better demand we see for this product than for HIPS.” In China, GPPS prices tracked a US$5-20/ton lower trend while HIPS offers were mostly stable and only edged down by US$5/ton. The increase on styrene costs are supported by the planned maintenance shutdowns, mainly in Japan. Four plants are shut in that country, including Asahi Kasei’s 320,000 tpa and 390,000 tpa plants, which are shut for about a month or two, starting from end-February. Apart from Asahi Kasei, NS Styrene Monomer also shut two plants with capacities of 190,000 tpa and 230,000 tpa for around 40 days. One of the plants shut by end- February and the other one is to be shut by mid-month. However, the increase on styrene prices is not seeing support from benzene feedstock costs, which have witnessed decreases in China on the back of the thin demand. Local Chinese producers lowered their benzene prices to competitive levels when considering import benzene prices but the buying interest in the country continue weaken. Benzene feedstock costs are around $50/ton lower when compared with early March levels on FOB South Korea basis. According to ChemOrbis, although overall demand is not encouraging and benzene prices are softer, PS sellers in China appear reluctant to offer large discounts on the back of the firm styrene costs. Plus, China’s Shanghai Secco shut their 300,000 tpa PS plant for maintenance on March 11 for a 45-day turnaround.