Aromatics '05: Cost volatility could kill PS - BASF

15 November 2005 17:52  [Source: ICIS news]

COLOGNE (ICIS news)--Volatile feedstock costs could destroy the polystyrene (PS) market as consumers switch to other materials, Jaroslaw Michniuk, marketing director, styrenic thermoplastics commodities, of BASF warned on Tuesday.

Speaking at the fourth European Aromatics and Derivatives Conference, he explained that the West European PS market had stagnated to growth of only 0.5%/year despite growth in other plastics. The food packaging sector was the only growth area in Europe at 3%/year but this was less than the sector overall.

Michniuk noted that PS was the polymer of choice for packaging but customers stressed price predictability as the most important aspect in the pricing of PS. Price volatility of styrene had grown to Euro100-150/month compared to Euro50-70/tonne for propylene, he said.

He showed that there had been a redistribution of margins up the chain. The overall margin between naphtha and PS was essentially unchanged over the past 15 years, he said. But, the margin share held by ethylene and benzene had grown from 35% in 1993 to 65% in 2005.

Michniuk also explained that the ease of processability of PS compared to polypropylene (PP) meant that converters were happy to pay a Euro100-200/tonne premium for PS. However, when the premium went to over Euro450/tonne in 2004, there was a switch to PP. In the last four months of 2004, PS demand in Europe fell by 12% while PP demand increased by 5%.

By: Peter Taffe
+44 20 8652 3214

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