Downtrend in Asian styrenic polymers may continue through July

Styrenic polymers in China and Southeast Asia have seen prices falling by significant degrees in the four months since early March as demand kept weakening and feedstock styrene prices stayed mostly under pressure. Market players expect the downtrend to continue through July.

ChemOrbis PriceWizard shows import prices of ABS inj. into both China and Southeast Asia falling by 17-20% since early March till the week ended 9 July. ABS import prices are currently at a 22-month low in Southeast Asia and a 24-month low in China.

The overall range for import ABS inj. prices in China was assessed $50-100/ton lower from the previous week at $1610-1750/ton CIF, cash, in the week ended July 9. In Southeast Asia, import ABS inj. prices were assessed $30-70/ton lower at $1750-1830/ton CIF, cash, with Northeast Asia origins standing at $1750-1800/ton with similar terms.



ABS being sold ‘below marginal cost’, claims producer

“We see most suppliers currently selling ABS below the marginal cost,” said a Southeast Asian producer. “We don’t understand why producers should sell at just about $100/ton higher than the cost of styrene. Most of them could be expecting significant drops in the price of styrene in the coming months,” he added.

And, the weakening demand is not making things any easier for suppliers in the region.

“Prices keep going down every week as crude and styrene prices keep falling, while demand is not showing any sign of a revival,” added a trader in China. “Buyers seem to prefer locally-traded ABS to imports as the former is more competitive. Nobody seems to have a positive pricing outlook,” he added.

Difficult to compete with China’s local PS producers

As for PS, ChemOrbis PriceWizard shows import prices as having fallen by 11-12% for GPPS in China and Southeast Asia since early March and HIPS prices by 5-6%. China’s GPPS import prices are currently at a 18-month low, while Southeast Asia’s are at a 22-month low.

In China, import prices for overall origins of GPPS injection and HIPS injection for the week ended July 9 were both assessed $10/ton lower respectively at $1440-1540/ton and $1610-1660/ton, on CIF, cash basis. Import prices fell by much larger margins in Southeast Asia. Prices of imports from all origins were assessed $70-90/ton lower at $1500-1580/ton for GPPS inj., and $10-30/ton lower at $1650-1700/ton for HIPS Inj., both on CIF, cash basis.



Sellers are facing tremendous pressure because of the weak demand. Market players have been reporting PS offer levels falling every week, but buyers were holding out for more discounts ahead.

Double-whammy of low costs, weak demand

“We may keep offers stable but the twin pressures from low costs and suppressed demand are too much. And, it has become too difficult to compete with domestic suppliers in China. We could keep offers stable but if there are genuine buyers, we could offer good discounts,” said a Taiwanese PS producer.

Some producers take this as an opportunity to go for turnarounds. “Demand is too weak, so we have shut our plant for a week till 14 July with a view to renovate our plant equipment,” said a Southeast Asian producer.

Despite a sharp rise in the first week of June, styrene prices are about 5% lower from early March levels.

Occasional crude oil spikes not enough

According to a Chinese trader, even the occasional spike in crude oil prices may not be enough to support the styrenic polymer markets. “Most suppliers have revised their offers down because of the lack of cost support and slow demand. Even when crude oil rebounds, downstream players remain on the sidelines, or buy only limited volumes,” he added.

He expected the near term market outlook to remain weak unless there’s a prolonged and sustained increase in the crude oil price.

“We consider this is the time to keep waiting, not for buying. We’re not sure when we’ll start buying significant volumes,” a Southeast Asian converter added.