EPS producers in cutbacks

14 May 2001 00:00  [Source: ICB]

European expandable polystyrene producers (EPS) are engaging in a bout of capacity cutbacks, in an attempt to match European output with demand. Italy's EniChem has confirmed it will lower EPS output by up to 30% through May and June, in response to weak margins and poor market conditions.

Although other EPS industry sellers have not made public statements regarding capacity utilisation, they admit they are 'matching production to real demand' and 'closely monitoring inventories, in order to avoid running up stocks', in a poor market.

Producers confirm that slack demand, particularly from the building sector, has hit EPS sales of block material, which is weaker than the packaging sector. Sellers admit that 'EPS margins are dreadful', in a market of lower prices and reduced sales.

European EPS prices have come under downward pressure in the current market. At the end of quarter one price packaging grade stood at DM2.25-2.30/kg, since then they have drifted down to DM2.10-2.15/kg. Falling styrene monomer prices, while removing some pressure on margins, confirm the downward trend in prices along the ailing styrenics chain.

European quarter two styrene contract prices fell E75/tonne to E700-725/tonne. While spot numbers have slipped from above $600/tonne fob NWE at the beginning of quarter two, they currently stand at at $520-530/tonne fob NWE and could fall further.

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