EPS - Expandable polystyrene

26 February 2001 00:00  [Source: ICB]

Worldwide demand will grow at an estimated 5%/year, with North America and western Europe losing market share to China and Northeast Asia

Uses

EPS is a rigid cellular form of polystyrene with good thermal insulation and shock absorbing properties, high compressive strength, low weight and resistance to moisture. It has applications in the construction industry in heat and sound insulation, siding and exterior wall sheathings. It is used in packaging and provides protection for small and large domestic appliances and sensitive equipment. It is also used to make disposable containers and vending cups.

Supply/demand

Global demand is expected to hit 2.9m tonne in 2001 on growth of just under 5%, according to CMAI consultancy. In Northeast Asia, demand in 2001 should increase by over 7%, mainly due to strong growth in China, which represents nearly 60% of regional demand and over 20% of world demand. In Europe, strong demand and rising prices in the first six months of 2000 reversed in the second half with demand and prices falling away as converters destocked. CMAI says demand in Europe fell to 825 000 tonne last year from 950 000 tonne/year in 1999. It puts the average operating rate in 2000 at 87% and forecasts about 90% for 2001. Europe is structurally oversupplied, and industry consolidation and restructuring has been a feature in recent years. The last major deal was Nova's purchase of Shell's styrenics assets, which was completed early last year and moved Nova from fifth to first place in Europe.

Pricing

Prices in February are quoted in the range DM2-2.20/kg. Producers announced a 20 pfg/ kg increase from 1 February but say only part has been achieved. The average cash margin for 2000 is rated at E80/tonne by CMAI, which says margins for January business were negative at minus E10/tonne.

Technology

EPS beads are produced in the suspension process by adding a blowing agent, normally pentane, which causes resin to foam during moulding. The process may be performed in one or two steps. The single-step process uses direct thermal extrusion of the material after blowing and is mostly used for sheet and film manufacture. The two-step process passes the blowing agent through the beads which are then steam heated, causing them to expand and produce the cellular form which is then moulded.

Health and safety

EPS is safe to use and non-toxic in solid form. However, heating styrene-based polymers above 79.44°C can release styrene monomer which is a hazardous material. The blowing agent may form an explosive compound with air and EPS must be stored in a properly ventilated area and the generation of static electricity should be prevented. When EPS burns, large amounts of smoke and soot are formed.

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MAJOR EUROPEAN EXPANDABLE POLYSTYRENE CAPACITY, '000 TONNE/YEAR

Company	Location	Capacity
Western Europe
BASF	Ludwigshafen, Germany	180
	Tarragona, Spain	20
BP	Marl, Germany	85
	Wingles, France	70
BSL	Schkopau, Germany	40
EniChem	Feluy, Belgium	35
	Mantova, Italy	45
Nova	Berre, France	65
	Breda, Netherlands	90
	Carrington, UK	70
	Ribecourt, France	90
Polidux	Monzon, Spain	5
Styrochem	Kokemaki, Finland	50
	Porvoo, Finland	55
Sunpor	St Polten, Austria	35
Synbra	Etten-Leur, Netherlands	20
Unipol	Pernis, Netherlands	54
Eastern Europe
Dunastyr*	Szazhalombatta, Hungary	27
Dwory	Oswiecim, Poland	65
INA	Zagreb, Croatia	18
Kaucuk	Kralupy, Czech Republic	35

* owned by EniChem Source: CMAI

Outlook

CMAI expects demand worldwide to stay strong to 2005. China is the key to growth and its share of the world market is expected to increase in the coming years. By 2005, CMAI projects the global market to reach 3.7m tonne, assuming a forecast growth rate of 5.2% for 1999-2005. Half of the additional consumption will come from Northeast Asia, with China taking the largest slice. North America and western Europe will continue to lose market share to other regions. Demand is tipped to outgrow capacity additions which are expected to be lower than consumption in 2003-05. No new capacity has been announced post 2002, which will lead to a tightening of the supply/demand balance. More new capacity is expected to be announced by 2005, which will return operating rates to more normal levels. BASF and Russia's Nizhnekamskneftekhim are planning a 40 000 tonne/year plant in Tatarstan to start up in 2003. Output will serve the rapidly growing markets in the Russian Federation. BASF says board approval is expected this year. Kaucuk is expanding capacity to 70 000 tonne/year by 2002. Further industry rationalisation is expected in Europe which could lead to the closure of marginal, non-integrated players.

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