EPCA ’08: Russia demand bucks styrenics trend

28 September 2008 15:16  [Source: ICIS news]

MONTE CARLO (ICIS news)--Styrene supply in Russia and Eastern Europe is increasingly being absorbed by domestic demand, limiting westward exports, several European players said on Sunday.

“Russia is very tight,” said a trader source on the sidelines of the European Petrochemicals Association (EPCA), “there’s not a lot available.”

Whereas demand for styrene in Europe was clearly on a downwards trend, with year-to-date polystyrene offtake down an estimated 9% according to market participants, the trader said that Russia was seeing sustained growth.

“It’s the exception to the current economic rule. If you compare consumer confidence in Russia to Germany, there’s a big difference. Every time I see the Russians, they say their demand is more and more and more.”

Another trader based in Russia said that a burgeoning middle class and a relatively vibrant construction sector were helping to see demand for PS and expandable polystyrene (EPS) for construction shift ever upwards.

A Russian trader agreed, adding that with new downstream capacity coming up over the next one-to-two years to meet demand it was likely that supply to Europe would continue to be constrained.

A source at a major EPS producer meanwhile said that eastern Europe was equally lucrative with the construction and reconstruction sectors yet to feel the pinch of recession seen in other global regions.

New EPS capacity in Austria from producer Sunpor would find a home, the source added, despite the crumbling Western European economy

“The target market is the ‘new EU’ countries,” he said. “It’s clear that they have double-digit growth numbers and demand for EPS in insulation is growing far more quickly that in the rest of Europe.”

The increase in demand for end products in Europe and Russia, however, did not mean that European traders and producers would find it easy to sell east, however, the first trader said.

“The internal market will not give up,” he said. “As soon as you try to import to Russia and the manufacturers can feel it, they are gonna kill you. It’s physically impossible because of the logistical issues in the country.”

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By: Peter Salisbury
+44 20 8652 3214

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