Asia EPS trade hampered by marine code for open container

Asia’s expandable polystyrene (EPS) sales continues to suffer because of a new maritime code that requires it to be moved in ‘open top’ containers raising concerns that higher shipping cost will curb demand of Asia resins from overseas buyers, industry sources said on Thursday.

Changes to the International Maritime Dangerous Goods Code, which went into effect on 1 January, requires EPS resin to be shipped in either a ventilated container, a container with one door removed or a container with an open top.

The change, implemented by the International Maritime Organization, is designed to address concerns about the flammability of pentane, the gas which is used as a blowing agent to cause EPS resin to foam.

Implementation of the new rules has been uneven although more and more shippers in Asia are now considering to fully implement it.

Talk of the recent announcement by the Chinese government in Shanghai requiring all EPS shipments to be in such containers circulated the market.

“The rule was heard announced on 22 Sep and this will likely increase the cost of shipping by around $30/tonne for those utilising this mode of shipment from this area,” said a trader in Asia who buys resins from eastern China.

Some market players anticipate that Asia buyers could seek resins from other outlets such as southern China or Taiwan, where this requirement has not been fully mandated yet.

“So far we have not heard the implementation of this ruling to other areas of China apart from Shanghai, although increasingly more and more shippers are expected to adopt this practise,” said a producer in eastern China.

The rules, however, continue to vary among shippers in Asia and also depend on the country of origin and destinations.

“Shippers continue to vary in implementing this rule. Usually shipping to Europe would require this open top container, while this is not strictly required for shipments to the US,” said a Taiwanese EPS maker.

The cost of shipping with open top containers was estimated to be an additional $30/tonne within Asia and by an additional $50/tonne or more for cargoes moving outside of Asia.

Shipping of containers from Asia to the Middle East and Europe were estimated at $60-120/tonne depending on the destination as well as cargo origin.

“The cost of utilising open top containers varies greatly between destinations but the costs surely have impacted the demand for Asia resins,” the Taiwanese maker added.

The lack of such containers has also hampered the EPS trade.

Shippers have limited impetus to fabricate or purchase such containers given that other resins have no such need.

“The shortage of containers have also constrained the amount of EPS sold within Asia and exported outside of Asia,” said another Taiwanese producer.

EPS prices have drifted to around $1,665/tonne FOB (free on board) NE (northeast) Asia in mid-September from $1,780/tonne FOB NE Asia in July, according to ICIS data.

The Chinese manufacturing season for exports has wound down in September, with demand for EPS on the decline from the packaging sector.

EPS is made into Styrofoam which is used for packaging as well as insulation panels for buildings and roads.
Source: ICIS