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HIPS’ unusually wide premium over GPPS down to 8-month low in Asia

by Manolya Tufan - mtufan@chemorbis.com
  • 23/08/2021 (03:13)
Data from ChemOrbis Price Index show that the premium that import HIPS prices in China carried over GPPS hit an all-time high of $430/ton in March while the peak was seen at $385/ton in May in Southeast Asia. Since then, the unusually wide spread between the two products has been gradually closing and recently reached an 8-month low.

CIF – China – GPPS– HIPS– SEA

Gap narrows as GPPS remains more in demand than HIPS

The import pricing gap between HIPS and GPPS shrank to eight-month lows of $175/ton in China and $215/ton in Southeast Asia last week. The market has been seeing a better sentiment for GPPS, rising at higher margins than HIPS during bullish phases and falling at lower margins during bearish phases.

Although overall demand in the downstream markets was subdued amid lower operating rates at the converter level, GPPS consumption has been a shade better compared to HIPS thanks to higher demand for single-use items amid Covid-related lockdowns.

On the other hand, HIPS drew a weaker picture amidst the ongoing sluggishness in end markets including automotive and home appliances sectors. Adding to the stagnancy in derivative markets has been lower production rates at manufacturing plants across the board amid rising Covid cases and logistics operations paralyzed by floods, congestion at ports and container shortage.

Prices rise after weeks of declines

Meanwhile, PS markets witnessed hike attempts last week despite sharply lower styrene costs.

While most buyers still kept themselves to the sidelines, producers cut operating rates and pared down inventories to cut costs. This gave suppliers some leeway to raise offers although deals at higher levels were few and far between.

Relatively better demand paved the way for more visible hikes for GPPS, with prices being assessed $30/ton higher from the previous week at $1410-1490/ton CIF China, cash. Meanwhile, HIPS prices on CIF China basis were assessed stable to $10/ton higher last week at $1570-1680/ton amid weaker demand from downstream markets.

A Taiwanese producer raised GPPS prices by $50/ton and HIPS by $10/ton from the previous week. “The cost support from crude oil and styrene prices is not there but the increase in freight costs has substantially supported import prices. We don’t intend to lower offers as our inventory levels have considerably been reduced although there is still huge resistance from buyers,” a source from the producer said.
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