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Global PS markets under continued downward pressure

by Başak Ceylan - bceylan@chemorbis.com
  • 22/06/2021 (03:15)
PS markets across the globe came under further downward pressure during the week ending June 18. As the firming in crude oil prices failed to prop up upstream values, prices ended last week at lower levels in Italy and Northwest Europe, as well as in Southeast Asia and China. Turkey’s local PS markets also moved closer to their lowest in nearly four months.

June deals done at steep discounts in Italy and NWE

In Italy and Northwest Europe, June PS deals were concluded with decreases ranging from €270/ton to €300/ton compared to May. Despite the marked falls, buying interest remained weak as most buyers continued to restrain their purchases amid a bearish outlook.

According to players, PS prices in the region have been under pressure from feedstock costs, a better supply position from imports, and weaker demand. July expectations were for decreases of up to 3-digits, depending on the styrene’s trajectory as well as demand woes ahead of the summer holidays.

As ChemOrbis Price Wizard shows, spot styrene on FOB NWE basis stands nearly 20%, or more than $280/ton lower from mid-May levels, despite a slight uptick towards the end of the week ending June 18.

Pandemic dims SEA outlook while downtrend lingers in China

PS prices in both China and Southeast Asia fell for the fourth week in a row, largely due to a seasonal lull and the uncertainties amid the COVID-19 resurgence in the region.

The weakness in Chinese domestic market pushed import levels further down during the week ending June 18. Converters’ production rates were under stress amid power shortfalls, leading them to stock less material. Congestions at Chinese ports also depressed demand for imports.

Covid-enforced lockdowns and curfews across the region continued to pressure demand in Southeast Asia. The recent price decreases reflected an underlying weakness in demand while the near-term outlook remained dim amid the ongoing pandemic.

Although crude oil prices recently hit a 32-month high, spot styrene prices in Asia remained largely indifferent, ending last week $20/ton lower. According to ChemOrbis Price Wizard, spot prices on CFR China declined by 7% on average within the past two weeks.

Expected demand uptick in Turkey delayed to July

The downtrend extended into the second half of June in Turkey as weak interest towards long-distance cargoes continued. Weak styrene costs despite firm oil prices and the current trend in nearby European markets also pressured the sentiment.

A local producer revised their prices further down while locally-held markets were close to their lowest levels since early February during the week ending June 18. A distributor argued that buyers were not rushing as feedstock prices failed to respond to multi-year high oil markets.

Expectations for July were mixed on a diverse range of factors. However, most buyers said they were cautious and expecting further declines next month. At the same time, some players forecast better activities following the long holidays in July as the tourism season and the reopening of schools could potentially boost the use of disposables and stationary items.
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