Europe April PS buyers face up to price pressure

12 April 2007 16:11  [Source: ICIS news]

LONDON (ICIS news)--European polystyrene (PS) players were still discussing April PS pricing this week, with large buyers under heavy pressure to accept increases over last month, sources said on Thursday.

 

PS producers were determined to recover a minimum of the April styrene contract increase of €35-40/tonne ($47.20-53.90/tonne), plus some margin that they had lost in March.

 

“We need a minimum increase of €50/tonne for April PS. But increases will be based on the supply/demand balance and not only our higher costs,” said one major producer.

 

“The key focus is availability. We have absolutely no spare volumes. Why should we deliver material to buyers who refuse to pay anything less than a €50/tonne increase? Things are genuinely tight,” he added.

 

This shift in balance in the PS market resulted from last year’s closure of 350,000 tonnes/year of production capacity in Europe, about 11% of the total industry. Since then, producers have reported improved offtake, particularly for extruded polystyrene (XPS) applications, used mainly for insulation board.

 

“The XPS market remains one of the few strong growth areas in the PS industry,” another producer said.

 

“Growth in this area is being driven by new building regulations in Europe and environmental concerns in general. Eastern and central Europe in particular are showing phenomenal rates of growth,” the source said.

 

PS buyers acknowledged that they would have to accept higher prices for April, but they were disputing the amount proposed by sellers.

 

“We agree that higher monomer costs need to be covered, but we are not prepared to pay anything more than the styrene hike,” one large buyer said.

 

Buyers were generally ready to accept hikes of €30-35/tonne this month, but so far no producer would confirm that such an increase was on offer.

 

The monthly price was expected to be settled in the coming days.

 

General purpose polystyrene (GPPS) gross prices were reported at €1,380-1,390/tonne FD (free delivered) NWE (northwest Europe). Gross prices are heavily discounted. Smaller and medium-sized buyers with only limited discounts were paying €1,250-1,270/tonne FD NWE this week.

 

($1 = €0.74)

 

By: Linda Naylor
+44 20 8652 3214

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