24 November 2004 11:05 [Source: ICIS news]
ANTWERP, Belgium (CNI)--Styrene producers and consumers must adapt to over-supply and low margins, consultant Lee Fagg of Nexant said here at the Third European ?xml:namespace>
Over-supply is expected to continue if new projects are realised, and operating rates are likely to decline into the low 80s% by 2009, he said.
Significant capacity additions in the
Fagg predicted a 3.5% global growth rate for styrene, taking into account product substitution and slower growth in the
In terms of return on investment, benzene derivatives including styrene and cyclohexane have out-performed the petrochemical market but volatility remains a constant for the industry.
Total West European benzene demand in 2004 totalled 8.7m tonne, of which ethylbenzene (EB) and styrene demand accounted for 50%. This was a difficult year for styrene because benzene prices spiked dramatically, and Fagg predicted that the structural tightness of benzene would continue for at least the medium term.
Despite strenuous efforts on the part of styrene producers to pass on the increased cost of feedstocks, margins have declined. Of all the major benzene derivatives, styrene has been by far the worst affected.
At the same time, the key end-use markets for styrene, polystyrene (PS) and expandable polystyrene (EPS) are coming under threat of substitution from other polymers such as polypropylene (PP), acrylonitrile-butadiene styrene (ABS) and polycarbonate (PC). This was not just due to cost, explained Fagg. He cited the example of Macdonald’s switching its burger boxes from EPS to cardboard for environmental reasons.
*Organised by global price reporting and market intelligence service ICIS-LOR, European Chemical News and consultants International eChem, the conference concludes today (Wednesday). ICIS-LOR and ECN are part of the same publishing group as CNI.
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