FocusPS use turns obsolete in new gadgets, some producers exit

21 April 2009 07:09  [Source: ICIS news]

By Clive Ong

SINGAPORE (ICIS news)--Technological innovations at end-consumer products have been gradually killing the polystyrene (PS) industry, prompting some regional producers to completely drop the business, market sources said on Tuesday.

PS’ staple markets such as audio, video cassette tapes and cathode ray tube television (TV) are becoming obsolete and may be doomed to extinction, as the era of compact discs, digital video discs and flat screen TVs takes over.

The chemical is used in the casings of these tapes and old-model TVs, among others.

“There is a lack of new applications that requires large amount of PS, hence demand is expected to decline” said a Taiwanese resin manufacturer.

It was a decline in demand not precipitated by the ongoing global economic crisis.

The sturdier kind of plastics that cover the latest game consoles and gadgets like mobile phones and MP3 players now require polycarbonates (PC), acrylonitrile-butadiene styrene (ABS), PC, polymethyl methacrylate (PMMA), putting the use of PS aside.

Japan Polystyrene Inc (Japan PS), a joint-venture between Mitsui Chemicals and Sumitomo Chemicals, was the latest to call it quits in PS industry come September this year, leaving three others to serve the Japanese market.

“Demand for PS has been declining since 2001 and the industry has been rationalising since then, so it is no surprise when the Japanese leave the industry,” a trader said.

The four PS players in Japan have a combined annual capacity of 1.1m tonnes, about 70% of which is being supplied to the domestic market.

Japan’s demand for PS is expected to fall 6.5-7.0% this year to 700,000 tonnes, said a producer. “The pull-out of Japan Polystyrene would make the demand-supply situation more balanced, he said.

Mitsubishi Chemicals was also reported to be exiting from PS Japan Corp, its joint venture with Asahi Kasei Chemicals and Idemitsu Kosan. PS Japan, which has about 445,000 tonne/year capacity, is the biggest of the four producers.

Dainippon Ink and Chemicals (DIC) and Toyo Styrene, which is owned by Nippon Steel, Denka and Daicel, would continue producing PS amid expectations of weaker demand.

Among those that gave up their PS operations is German petrochemicals conglomerate BASF, which announced in July 2007 that it was selling its various styrenic units, including PS.

Idemitsu PS Malaysia also stopped 30,000 tonnes/year GPPS production in September 2008.

Dow Chemical, meanwhile, had shut its 120,000 tonne/year PS unit at eastern China in April this year indefinitely according to market sources.

PS has outlived its use at least for the latest electronic gadgets that it is now being largely relegated to low-end products like food packaging, toys, clothes hangers, containers and certain consumer electronics.

But demand from these markets could dwindle with the availability of cheaper alternatives like polypropylene (PP), traders said.

China, a key market for PS, has also seen a continuous downtrend in PS demand from 2003, when demand peaked to more than 2.6m tonnes. It was down to 2.3m tonnes last year, industry sources said.

New PS ventures are currently being concentrated in the mainland so the plants would be closer to end-customers, they said.

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By: Clive Ong
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