Heavy discount on booking price of Styrene Monomer in India fails to strengthen demand – 27 Mar 2014

Bearish market sentiment has been noted for Styrene Monomer in India over the past few months, which to a considerable extent is influenced by weak international trend for the chemical. Heavy discounting, poor off takes at ports and strengthening Rupee has pulled down the prices for the chemical this month. In this regard, this market reviews provides a 360 degree perspective on Styrene and its end product Polystyrene in the Indian markets.

In the month of February, Styrene Monomer was trading at an average rate of Rs. 112 per kg (exclusive of taxes). However, due to decline in international benchmark Benzene prices, weak international demand and surge in supplies for Styrene, the price for the chemical has tapered off in the past few weeks.

Styrene Monomer was trading in the range of Rs. 108-109 in the first week of March and as of this week the bulk prices are at Rs.104 per kg (exclusive of all taxes).

"Presently the booking price is at Rs. 114 per kg (exclusive of all taxes) for Styrene Monomer, however companies are offering heavy discount to traders on this rate, hence the current rate of Rs. 104 per kg (exclusive of all taxes)", an industry source told Indianpetrochem.

The website comprehends from conversation with various trader that the off- takes from buyers is generally lower in the month of March, in this context a prominent trader added that off takes are usually lower by 25%, specifically for Styrene, this month.

"As the situation in international markets, there is a slump in demand in the Indian market as well for Styrene, and this situation is applicable to all the other solvents as well. Thereby, we expect the prices to fall to levels of Rs. 99-100 per kg (exclusive of all taxes) in the short to medium term for the chemical", a Mumbai based trader informed the market.

One of the main end uses of Styrene is in manufacturing Polystyrene, in this context the website spoke to traders in Delhi market and understood that the demand and supply for PS is weak in the market. "Despite stability in prices for PS recently, most buyers feel that the prices are on the higher side for the polymer, which to some extent has curtained buying apart from other macroeconomic indicators", a trader told the website.

Interestingly, a prominent trader added that the supply position for PS isn't very strong in the market, which gives an indication that companies are trying to maintain the current prices by commanding the stock position.

Overall, its indicated that weak demand and surge in supplies at Indian ports for Styrene is pulling down the prices currently and shall remain to do so in the near term. In addition, the strengthen rupee is adding fuel to this bearish price sentiment. However, it will be interesting to note how long these indicators will impact the market as there is an overall positive outlook for the Indian economy post the elections. In words of Dr. Subir Gokarn , Sr. Fellow and Director of Research, Brookings India, " The recent stabilization in the macro environment supported by the rupee stabilization, sharp correction in the current account deficit are green shots for the Indian economy over the coming year", as commented at CIIs Annual Session 2014.