Product profile: EPS

25 November 2002 00:00  [Source: ICB]

The industry has welcomed the indefinite closure of Nova Chemicals' plant in the UK but more rationalisation is needed in Europe to improve profitability

Uses

Expandable polystyrene (EPS) is a rigid cellular form of polystyrene (PS) with good thermal insulation and shock absorbing

properties, high compressive strength, very low weight and resistance to moisture. Uses include heat and sound insulation in buildings, siding & exterior wall sheathing, packaging and disposable containers.

Supply/demand

The European EPS market had a strong first half year after a shaky start. Producers and converters started 2002 with extremely low stocks and plant operating rates had been cut back to a low of 70-75%. However, a shortage of styrene feedstock in quarter two tightened availability of EPS and demand, which was seeing its seasonal pickup, was also boosted by buyers' expectations of higher prices. Consumption picked up again in September and October after the summer lull but is now slowing. Supply has improved and is now more balanced.

Players are expecting demand in 2002 to be flat or up by 1-2% at most versus 2001. Consumption in Germany, the biggest market for EPS, is down because of a slump in the construction sector and little improvement is expected in the short term. Demand in Benelux is also down but consumption in southern and eastern Europe is up. CMAI estimates west European production will be around 940 000 tonne this year, with demand coming in at just under 800 000 tonne.

Europe is still oversupplied with capacity of around 1.4m tonne/year versus consumption of about 1.1m tonne/year. Kaucuk's phased expansion to 60 000 tonne/year was completed earlier this year. Capacity at the plant in Kralupy, Czech Republic, has risen in stages from 20 000 tonne/year when it started production in 1996. Nova Chemicals idled its 75 000 tonne/year Carrington, UK, plant from end-October. The unit, representing a quarter of Nova's European capacity, is likely to be closed for at least one year.

Pricing

Prices have eroded considerably in the second half of 2002 due to slower demand and rising inventories, after increasing by about 30% in the first half. Numbers in early November were quoted at E1010-1050/tonne spot Germany for block EPS after hitting a high of E1240-1260/tonne in June. Prices of E740-790/tonne at the start of 2002 were the lowest seen since the summer of 1999.

Margins are regarded as unsatisfactory although they were helped in quarter four by the E58/tonne reduction in the contract price for styrene feedstock. Producers' target is to bring prices back up to the levels seen mid-year but there is little chance of any price rises being implemented until March/April next year.

Technology

EPS beads are produced in the suspension process by adding a blowing agent under pressure, normally pentane, that causes resin to foam during moulding. There are two processes - extrusion or steam moulding. The one-step extrusion route uses direct thermal extrusion of the material after blowing and is mostly used for sheet and film manufacture.

The two-step steam moulding process passes the blowing agent through the PS beads during or after polymerisation. The beads are then steam heated to above their glass transition temperature causing them to expand (by 40 to 80 times) and produce the cellular form which is then moulded.

Health and safety

EPS is safe to use and non-toxic in solid form. However, the EPS beads will emit pentane vapour during storage. Pentane is extremely flammable and may form an explosive compound with air. Heating PS-based polymers can release styrene monomer which is a hazardous material. PS powder can cause irritation by inhalation and skin contact.

Outlook

Demand growth in western Europe is projected to be in line with GDP rates over the next several years, although it is rated higher in the growing economies of eastern Europe.

No further projects are planned in western Europe and the status of BASF's plans for a 40 000 tonne/year facility in Nizhnekamsk, Tatarstan, is unclear. BASF says there is no news on the previously proposed 50:50 joint venture with Nizhnekamskneftekhim, but the startup of the EPS plant will not take place in 2003 as originally scheduled.

More rationalisation and restructuring is needed in Europe, but no more firm moves have been taken to date.There are a number of small and non-integrated players in the EPS sector and these are seen as likely candidates for future consolidation.

European EPS capacity (2002) '000 tonne/year

Company	Location	Capacity
BASF	Ludwigshafen, Germany	180
	Tarragona, Spain	20
BP	Marl, Germany	90
	Wingles, France	75
Brodr Sunde	Aalesund, Norway	38
Dow Chemical	Schkopau, Germany	40
	Lavrion, Greece	3
Dunastyr*	Szazhalombatta, Hungary	40
Dwory	Oswiecim, Poland	65
INA-OKI	Zagreb, Croatia	10
Jackon	Wismar, Germany	20
Kaucuk	Kralupy, Czech Republic	60
Knauf	Mons, Belgium	40
Monotez	Inofyta, Greece	4
Nova	Berre, France	55
Chemicals	Breda, Netherlands	90
	Carrington, UK**	75
	Ribecourt, France	90
Polidux	Monzon, Spain	5
Polimeri Europa
	Feluy, Belgium	40
	Mantova, Italy	45
SIR Industriale	Macherio, Italy	17
StyroChem	Kokemaki, Finland	45
	Porvoo, Finland	60
Sunpor	St Polten, Austria	55
Synbra	Etten-Leur, Netherlands	20
Unipol	Oss, Netherlands	54
* owned by EniChem
** idled indefinitely
Source: CMAI/ecn

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly