Digestion Rate Failed To Provide Cushion For SM Prices, Local PS Offers In China Move Into Two Directions
- Local PS prices move into two directions
- The irregularity that has been happening might change the traditional pattern on demand
- Outlook for China PS market is not positive due to lack of main supporting factor
Within the week commencing June 29, PS prices in the China local market captured moving into two directions. Based on the data collected by SSESSMENTS.COM, a local PS producer in the country reduced the offers for GPPS and HIPS Injection by CNY150/ton ($21/ton) as compared to last week’s level following softer SM prices. Due to the ample supply amidst slow demand, SM prices fell between CNY100-200/ton ($14-28/ton) during the same timeframe. On the other hand, another producer in the country increased the offers for GPPS Injection and HIPS Injection between CNY100-200/ton ($14-28/ton) as compared to the same period, on the back of relatively tight supply on the producer’s end. In the import market, deals for GPPS Injection offers for August shipment from a Vietnamese producer achieved at $920/ton, according to the producer source, the offers remain unchanged from last week. For South Korean cargoes, the producer has sold out the allocation for July shipment. The deals for HIPS Injection captured at $1,065/ton. All import offers on LC at sight, CIF China main port basis.
Chinese market players unveiled that demand for PS resins has started to shrink since after the shopping festival on June 18. Following the traditional pattern, China PS market is entering its lean season after the shopping festival. However, a PS producer contacted by SSESSMENTS.COM doubted whether such a pattern will be the same this year since there have been so many irregularities lately. As the market was on halt during the H1 2020 due to the weakened world economy, in H2 2020 every country will put some efforts to catch up the Gross Domestic Product (GDP) growth rate. On the supply front, on July 2, SM inventory in coastal China decreased by 700 tons, recorded at 321,400 tons. While on the traders’ end, the inventory level recorded at 219,900 tons, decreased by 1,200 tons, all compared to last week’s levels. Although the reductions, the digestion rate of SM inventory did not provide any cushion for SM prices. The sufficient SM inventory in the local market coupled with the volume of imported cargoes has dragged SM prices down.
In the days to come, the majority of Chinese market players opined that PS prices still have some room for further reductions as there is no sign of improvement in demand in the near future, as stated to SSESSMENTS.COM.
