Asia Styrene Snaps Losing Streak, May Gain Further
SINGAPORE (ICIS news)--Asian styrene monomer (SM) spiked 10%, snapping three straight weeks of losses, as buying interest picked up with renewed optimism that the global economic downturn has started to bottom out, traders said on Thursday.
Encouraging data on US energy consumption and on China’s industries helped crude futures to rally in crude futures above $56/bbl on Thursday, influencing SM prices, they said.
SM fixtures were heard at $910-925/tonne (€682.5-693.8/tonne) CFR (cost and freight) China, traders said, with expectations that prices could gain further ground on the back of tight supply in China.
Qilu Petrochemical has shut its 200,000 tonnes/year SM unit in Shandong, northern China, in mid-April for a month long turnaround while Maoming Petrochemicals’ 100,000 tonnes/year facility in southern China met with mechanical issues this week.
Maoming intends to shut the unit early next month for repairs.
Secco Petrochemical, on the other hand, will take its 500,000 tonnes/year SM plant in eastern China off line in mid-May for a 75-day maintenance and debottlenecking works.
Some SM sellers said they were cautiously optimistic that demand in China would improve in tandem with the bottoming out of the US economy. China is still gunning for an 8% GDP expansion this year with the help of heavy government spending.
SM goes into a wide variety of plastic resins and synthetic rubbers. Orders for finished products at Chinese factories in the seasonally busy third quarter could be better than expected, some sellers said.
“The orders could start filtering through in May and June as the global economy shows signs of stabilising,” said another resin trader in Hong Kong.
“The expectation for the SM and resins sector had been set so low this year that some positive news, data or expectations could move prices up,” said a SM trader.
But SM recovered in three days nearly half of the 20% value loss it had in the three weeks to end-April that some market players said speculation could be at play.
“The price reversal was too sudden and [the] uptrend too sharp. Some traders could be pushing up the markets to turn a quick profit,” said an end-user in Taiwan.
Before the sharp increase this week, SM prices in the key Chinese market had trended down with great rapidity to $835/tonne CFR, according to global market intelligence service ICIS pricing.
“Demand for styrenic resins remained very weak, so the jump in SM values appeared to be speculative rather than based on fundamentals,” said a resin trader in Hong Kong.
Sustaining the uptrend may be difficult as SM consumption from downstream styrenic resins sector has remained weak judging from the build up of inventories this week, market sources said.
SM inventories along the Chinese shore tanks doubled to 40,000 tonnes this week, they said.
Most resin traders and producers had anticipated a poor performance in the Chinese manufacturing season this year, with orders likely to be just about half their size in 2008.
Recent positive indications on the global economy allowed market players to hope for some improvement in market conditions.
Encouraging data on US energy consumption and on China’s industries helped crude futures to rally in crude futures above $56/bbl on Thursday, influencing SM prices, they said.
SM fixtures were heard at $910-925/tonne (€682.5-693.8/tonne) CFR (cost and freight) China, traders said, with expectations that prices could gain further ground on the back of tight supply in China.
Qilu Petrochemical has shut its 200,000 tonnes/year SM unit in Shandong, northern China, in mid-April for a month long turnaround while Maoming Petrochemicals’ 100,000 tonnes/year facility in southern China met with mechanical issues this week.
Maoming intends to shut the unit early next month for repairs.
Secco Petrochemical, on the other hand, will take its 500,000 tonnes/year SM plant in eastern China off line in mid-May for a 75-day maintenance and debottlenecking works.
Some SM sellers said they were cautiously optimistic that demand in China would improve in tandem with the bottoming out of the US economy. China is still gunning for an 8% GDP expansion this year with the help of heavy government spending.
SM goes into a wide variety of plastic resins and synthetic rubbers. Orders for finished products at Chinese factories in the seasonally busy third quarter could be better than expected, some sellers said.
“The orders could start filtering through in May and June as the global economy shows signs of stabilising,” said another resin trader in Hong Kong.
“The expectation for the SM and resins sector had been set so low this year that some positive news, data or expectations could move prices up,” said a SM trader.
But SM recovered in three days nearly half of the 20% value loss it had in the three weeks to end-April that some market players said speculation could be at play.
“The price reversal was too sudden and [the] uptrend too sharp. Some traders could be pushing up the markets to turn a quick profit,” said an end-user in Taiwan.
Before the sharp increase this week, SM prices in the key Chinese market had trended down with great rapidity to $835/tonne CFR, according to global market intelligence service ICIS pricing.
“Demand for styrenic resins remained very weak, so the jump in SM values appeared to be speculative rather than based on fundamentals,” said a resin trader in Hong Kong.
Sustaining the uptrend may be difficult as SM consumption from downstream styrenic resins sector has remained weak judging from the build up of inventories this week, market sources said.
SM inventories along the Chinese shore tanks doubled to 40,000 tonnes this week, they said.
Most resin traders and producers had anticipated a poor performance in the Chinese manufacturing season this year, with orders likely to be just about half their size in 2008.
Recent positive indications on the global economy allowed market players to hope for some improvement in market conditions.
quoted from: www.ICIS.com
