BASF drops Europe polystyrene by €30/tonne on lower styrene

02 October 2009 13:58  [Source: ICIS news]

LONDON (ICIS news)--BASF dropped its October polystyrene (PS) price by €30/tonne ($43/tonne) on Friday, immediately after the barge styrene contract settled down €45/tonne for the month, a company source said.

Net general purpose PS (GPPS) prices had been trading in the high €900s/tonne FD (free delivered) NWE (northwest Europe) at the end of September, but these levels were now expected to fall.

Demand for PS in Europe has been decreasing steadily and several permanent capacity closures had already taken place in 2009, or were due to take effect later in the year as supply outweighed demand.

The PS industry has been suffering from oversupply, even after 13% of installed capacity was brought down in 2006.

Weak margins led to the closure of Dow’s 65,000 tonne/year Bilbao, Spain, PS plant in the third quarter along with its 50,000 tonne/year facility at Terneuzen in the Netherlands.

BASF has closed 25% of its PS capacity in Ludwigshafen, Germany - estimated to be around 80,000 tonnes/year - and Total Petrochemicals also announced its intention to close some PS capacity in France in 2009. The exact amount has not been made public.

PS producers have been complaining of unsustainable margins for several years, pointing to the series of closures as proof that margins were unsustainable.

Producers expected to be able to expand the styrene-PS spread again in October after managing to expand it in September when styrene monomer fell by €84/tonne, and PS only by around €40/tonne.

PS producers managed to increase the spread between monomer and polymer by maintaining a strictly reduced production programme.

Demand had been dwindling in many sectors as technological advances left PS volumes weak. A couple of sellers reported August volumes at a record low in Europe.

PS producers in Europe include BASF, Dow Chemical, INEOS NOVA, Polimeri Europa and Total Petrochemicals.

($1 = €0.69)

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By: Linda Naylor
+44 20 8652 3214

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