Asian styrenics dip as traders liquidate on uncertain outlook

10 September 2009 06:57 [Source: ICIS news]

SINGAPORE (ICIS news)--Hong Kong traders and distributors are liquidating styrenic resins stocks-in-hand due to the sluggish demand in September and uncertain market outlook in China, traders said on Thursday.

“Traders are keen to reduce stocks and lock in profits ahead of the long national holidays in China starting 1 October,” an acrylonitrile-butadiene-styrene (ABS) producer said.

China's National Day holidays from 1 October to 8 October overlap the traditional mid-autumn festival on 3 October this year.

Polystyrene (PS) and ABS resins values declined in recent weeks as traders liquidated stocks, producers and traders said.

Given the uncertain outlook of demand in September, despite it being the last phase of the traditional manufacturing season, and volatile energy and feedstock styrene monomer (SM) prices, traders preferred to offload material for cash.

“This is not unexpected as traders will liquidate stocks to reduce storage costs and repay loans when potential profits and near-term outlook are doubtful,” said a trader based in Hong Kong.

Spot PS and ABS values had declined 2-7% over the past two weeks amid lower-priced sales by traders, according to data from global market intelligence service ICIS pricing. PS prices fell from $1,250/tonne CFR (cost and freight) China to $1,160/tonne CFR China while ABS values declined from $1,515/tonne CFR China to $1,490/tonne CFR China.

The Chinese exports sector remained lacklustre in the third quarter amid the global recession. Factories in southern China reported a reduction in business of 30-50% while some smaller outfits said volume had collapsed by 80-90% this year.

PS is used in many applications including food packaging, domestic appliances, electronic goods, toys, household goods and furniture while ABS is increasingly being used in the consumer electronics industry and has an important market in the automobile sector.

The central government’s efforts to stimulate the local economy had mitigated the exports shortfall to some degree but could not plug the hole entirely, traders said.