US buyers of polystyrene (PS) and polyvinyl chloride (PVC) are looking at importing material from Asia at favorable discounts to domestic prices, though not everyone is taking advantage yet.
Imported PS from east Asia has reportedly ranged between a 5¢/lb-15¢/lb discount against domestic material, which is marked at 119¢/lb for general purpose polystyrene (GPPS) and 130¢/lb for high impact polystyrene (HIPS) should contracts be finalized as expected. Some PS participants have claimed to get even steeper discounts in prior weeks. PVC prices out of China were assessed last week between $780/t-$810/t FOB China, a $30/t drop from the previous week and well below the $1,907/t US contract price that is expected to be finalized in the coming days.
US PS prices are the highest of any US polymer, and among the highest in the world, even as prices are likely to decrease for two straight months when September contracts settle.
Interest in Asian PS has been on the rise in recent weeks, even catching the eye of some US producers wary of losing some market share. While one producer recently said imports would never replace domestic consumption on a large enough scale to disrupt business outright, imports could instead create downward price pressure on US producers.
A buyer this week stated that they were able to import material from East Asia at a discount of as much as 10¢/lb-15¢/lb lower than domestic prices, an equivalent of hundreds of dollars per tonne. But this was for a delivery window of November-December, and shipping times are beginning to lengthen once again.
Discounts from places like Brazil were also available at as much as 5¢/lb lower than domestic prices. Logistical difficulties made it less appealing for this buyer, who indicated that while they remain interested in cheaper material, delivery time is still important.
For PS, declining Asian prices stem from poor demand across the region. One downstream participant monitoring the situation explained that producers in places like Vietnam have been struggling to find orders, even as styrene monomer (SM) production costs had increased. With higher costs and lower demand, producers in the area were looking to salvage finances by exporting abroad.
The PVC market is a bit more complicated. While multiple buyers have reported interest in importing material recently, there has been little confirmation of significant imports materializing yet. In fact, the most recent data from the Global Trade Tracker (GTT) indicated that US PVC imports hit a 14-month low in July.
The underlying cause for low imports in July does persist into September as domestic demand is still weakening. Downstream inventories remain elevated, according to multiple participants, while others in the market are buying only as needed in the coming weeks.
In dismissing concerns of significant imports for the PVC market this week, a producer said that many of their customers do not have the infrastructure to make imports worthwhile. Most of their customers get material delivered by rail, with little to no capacity to convert shipped bags to railcars and then to silos once delivered, making the whole prospect difficult.
For those that do have the ability or patience, the imported material is quite alluring. Domestic PVC prices range around $1,900/t should current contracts finalize as expected. Like with PS buyers, PVC buyers may simply use cheaper imports as a wedge to drive domestic prices further down, rather than switch dependencies altogether.
