Replenishment activity lifts China PS market out of downtrend

The retreat of PS prices in Asian markets from late November has been halted since last week as China demand improved somewhat ahead of the Chinese New Year holidays and feedstock support continued.

Import prices of GPPS and HIPS injection increased 2% and 3% last week to $1290/ton and $1600/ton respectively on CIF China basis, according to ChemOrbis Price Wizard weekly averages. Prices in Southeast Asia also managed to halt the slide but lagged behind China, with GPPS stable at $1315/ton and HIPS edging higher from $1620/ton to $1625/ton - both on CIF SEA basis.

Between the two grades, HIPS prices have done better due to demand for home appliances such as refrigerators, air-conditioners, and vacuum cleaners amid the work-from-home requirements amid the pandemic.

Pre-Chinese New Year effect starts

“Compared to the previous week’s offers, both grades went up as there is some replenishment activity ahead of the Chinese New Year holidays. Downstream industries are stocking up material and sellers have taken the opportunity to increase offers, “ a source at a Taiwanese producer said.

Another Northeast Asian supplier added, “Chinese demand has improved and buying has been robust. There is hope that Chinese buyers will return to the spot market and pick up substantial volumes post Chinese New Year.”

Chinese New Year starts on February 12 and lasts for a week during which business activity is much muted, which has prompted stocking up as well as to ensure availability immediately after the holidays.

The holidays are also celebrated in Taiwan, South Korea and in several Southeast Asian countries which have significant Chinese populations and strong trade linkages.

Turnaround, feedstock provide support

Adding to improving demand is potentially tighter supply in Southeast Asia with Vietnam Polystyrene’s 50,000 tons/year plant scheduled for a maintenance shutdown in late January.

There is also support from the feedstock cost front. Styrene prices - which have been gaining from late last month - remained well supported and rose 1% to $918/ton and $938/ton on FOB Korea and CFR China basis respectively last week.

Caution amid COVID-19 second wave

While demand might taper once stocking up is mostly done perhaps by the end of next week, market players are more cautious about the economic impact of renewed lockdowns stemming from a second wave of COVID-19.

China has seen the highest number of cases since the height of the pandemic in March. Other countries such as South Korea have also seen a spike while Southeast Asian nations such as Malaysia and Indonesia have imposed renewed social restrictions to curb the spread of the pandemic.