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Asian styrene moves lower despite stronger upstream costs

https://www.chemnet.com   Mar 09,2011 CHEMORBIS
Spot styrene prices in Asia have lost some ground over the past weeks even as crude oil and naphtha prices raced ahead to reach their highest levels since 2008. Players commented that styrene demand has not been responsive to tightening supplies in the region as existing stock levels have proven high enough to dissuade styrene buyers from purchasing beyond their present needs as they find their buffer stocks to be sufficient. Weaker styrene feedstock costs have also had a limiting effect on PS demand inside China.

Spot styrene prices ended last week $30-45/ton below the previous week’s done deal level on an FOB Korea basis as sellers agreed to reduce their offer levels in the face of slower than expected demand. Styrene producers complained that they are unable to cover their theoretical production costs at the current price levels as upstream costs posted considerable gains last week. Crude oil prices gained more than $6/barrel week over week to reach a level of over $104/barrel on the NYMEX as political tensions in Libya sparked concerns over the stability of crude supplies from the Middle East. The surge in crude oil prices also helped push spot naphtha prices on a CFR Japan basis upwards by almost $70/ton on a week over week basis, sending spot naphtha prices above the $1000/ton mark.

Downstream PS sellers in China are also complaining of seeing slower than expected demand. Although March is the beginning of the traditional high season for manufacturing in China, traders report that PS demand has not yet picked up in accordance with their expectations. Most traders and distributors said that they are focusing on their sales for now and that they are uninterested in restocking in large amounts given the cloudy market outlook.

Most players predicted that both styrene and PS prices would track a largely stable trend over the short term as sellers are expected to stand firm on their current offer levels in the face of steadily rising upstream costs.

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