FocusFuture bright for Europe PS due to ongoing demand - BASF

04 December 2009 16:55  [Source: ICIS news]

By Madelon Ten Cate

LONDON (ICIS news)--The future of polystyrene (PS) in Europe looks bright, with many new applications being developed for continuous demand of the product despite heavy interpolymer competition from especially the polypropylene (PP) market, Jaroslaw Michniuk from BASF said on Friday.

Disappearing consumer electrics and electronics markets, that mainly rely on the sale of compact disc covers, video cassettes and old televisions, have reduced the demand for solid PS, the Group Vice President of Styrenics Europe for BASF said.

At the same time, recent underperformance of automotive and building industries caused by the recession and the migration of industries to Asia, means the European PS market is left in limbo, with producers complaining of unsustainable margins for several years.

PP expansion in the Middle East will furthermore nurture interpolymer competition in the coming future, with up to 4m metric tonnes (m/t) of PP expected to come on stream by 2011.

Although producers in the Middle East were expected to run at full rates and export significant amounts to Europe as well, and not just to Asia, Michniuk forecasted that only 7% of the global PP capacity would be based in the Middle East on favourable cash cost by 2011.

Still, the non-competitive PP plants in Europe are expected to close down because of this.

All these developments have led to multiple permanent and temporary closures over the past 12 months, in the European PS market alone.

For example, at the end of 2008, Dow chemicals announced it would permanently close its 50,000 tonne/year PS production in Terneuzen, the Netherlands, as part of its transformational strategy.

This was followed by the company’s announcement in July this year to shut down its 65,000 tonne/year PS plant in Bilbao, Spain, due to poor economics and reduced demand.

In March 2009, Total Petrochemicals announced the shutdown of its “structurally loss-making” PS line at Gonfreville, France, with an annual output of 120,000 tonnes/year.

In June, German major BASF announced to close an 80,000 tonne/year PS plant at its site in Ludwigshafen, Germany, due to poor market conditions. The closure would reduce BASF’s total European PS capacity by about 15% to 540,000 tonnes/year.

This was soon followed by INEOS NOVA’s announcement to close permanently its 90,000 tonne/year PS plant at Breda in the Netherlands.

Nevertheless, the “unique selling point” of PS meant there were many ways of survival for the chemical product, Michniuk said.

The special characteristics of PS, like its good transparency and its easy processability give it a great advantage.

Firstly, it was expected that the packaging and construction industries would stay strong in Europe, as 50 years of success in the food packaging business would not suddenly be undone, Michniuk explained.

One area of focus by BASF is also the bottling sector, which is mainly dominated by the polyethylene terephthalate (PET).

Michniuk said that the density of PS was 25 % less than that of PET and that less energy is needed to blow the bottle than when using PET.

Another process that BASF has started to develop is the possibility to convert PS into expandable polystyrene (EPS), for foaming purposes.

Traditionally, styrene monomer (SM) is used to make EPS, but since mid-2009 BASF has started to produce EPS via the PS route, thereby keeping demand for PS healthy.

Michniuk said producing EPS from PS was relatively easy to do, and that EPS could be used to make insulation boards for the building industry, which has been growing at a steady rate for several years now, and was expected to remain healthy in the near future.

Of course, there were certain downfalls in the PS market, but if one stayed competitive, accepted the volatility of the product and remained innovative, future of PS was actually bright and opportunities for growth remained strong, Michniuk said.

For more on polystyrene visit ICIS chemical intelligence
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By: Madelon Ten Cate
+44 20 8652 3214

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