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Can Asia PS market continue recovery into 2020?

by Abdul Hadhi -
  • 30/12/2019 (09:34)
PS prices in Asia have ​rebounded from ​four-year lows on the back of higher styrene prices . But styrene prices have become more volatile, raising questions about whether the PS recovery can be maintained going into 2020.

Prices of import GPPS inj. and HIPS inj. are up about 2-3% on CIF China basis from the low in early December, according to ChemOrbis Price Index. In Southeast Asia, too, prices of both products are up by similar percentages from early December.

Asian PS prices gained ground during the first quarter of 2019 before broadly trending lower for the rest of the year, with occasional minor rallies. But the question remains as to whether the market will see a repeat of the gains in the first quarter of 2020.

Styrene more volatile lately

Recent gains by PS from early December are a catchup game with strengthening styrene from mid-November, allowing producers to justify price hikes with higher feedstock costs. They gained more than 6% in a month.

However, styrene prices have become more volatile in December on both FOB Korea and CFR China basis, with decreases of slightly less than 1% over the past week – based on ChemOrbis Price Wizard.

Despite the recent ease in styrene , PS suppliers are holding on to prices for now. “The market is basically stable. International crude oil is still at high levels. Most sellers maintain the ex-factory price and the support on the market is obvious,” a source at a Taiwanese producer explained.

2020 to be in limbo between maintenance shutdowns and new capacities

Maintenance shutdowns of styrene plants during the first half of next year could provide some cost support for PS by limiting styrene supply. In Taiwan, Taiwan Styrene Monomer’s 160,000 tons/year plant is due for shutdown in the second half of February; Grand Pacific Petrochemical’s 250,000 tons/year unit in the first or second quarter; and Formosa Chemicals & Fibres Corp’s unit at Mailiao in the second quarter.

Limiting the impact could be a total of 1.42 million tons/year of new capacities of styrene each by Hengli Petrochemical in the first quarter and CNOOC-Shell Petrochemicals’ unit in the first half of 2020, according to ChemOrbis Production News. Both projects are in China.

“We are worried about upcoming new capacities of styrene monomer in China. If styrene prices go down, it will be hard for PS prices not to follow suit,” a source at a Southeast Asian producer said.

Meanwhile, TPSC’s 100,000 tons/year PS unit in Singapore is due for a planned shutdown in the second quarter.

Quiet market until Chinese New Year

The PS market is expected to remain quiet heading into the Chinese New Year holidays in late January. China, Taiwan and Vietnam will be closed for a week while other countries in Southeast Asia such as Malaysia and Singapore will have a few days designated as public holidays during the period.

“China will slip into the holiday mood from the beginning of January. So, demand won’t be better. For the short term, prices will remain stable, as monomers are quite stable recently. But maybe after Chinese New Year, prices will go up,” a Malaysian trader said.

Any other factors to prop up PS prices?

Other factors that may have an impact on the market include the recent thaw in China-US trade tensions, which had led to reduced trade and slower economic growth. If trade improves, stronger economic growth is likely to drive demand for polymers.

GPPS is used in food packaging, disposable utensils and cutleries, while HIPS is used in consumer electronics and toys.

Another factor is higher freight rates and hence, higher import prices due to the required switch to fuel with lower sulfur content, which is also costlier for ships.
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