Europe PS buyers pay higher prices due to tight supply

22 November 2010 12:47  [Source: ICIS news]

LONDON (ICIS)--European polystyrene (PS) buyers have been forced to pay increases of around €50/tonne ($68/tonne) in November due to the tight supply in the market, sources said on Monday.Polystyrene buyers have been forced to pay price increases.

The increase was short of initial targets, which were as high as €100/tonne, but it covered the increase in the upstream styrene monomer (SM) contract for November.

“It was either pay more or not get the material,” one buyer said. “We have not been able to pass on these increases to our own markets, so we are losing margin.”

General purpose PS (GPPS) prices were trading at a minimum of €1,300/tonne FD (free delivered) NWE (northwest Europe) to smaller and medium-sized buyers, while large buyers enjoyed discounts.

In July, GPPS prices were at €1,220/tonne FD NWE, but have risen steadily since then.

Some producers now saw PS as structurally undersupplied in Europe after permanent closures in 2009, which followed an earlier cull of installed PS in 2006.

PS demand had picked up, supported by improved applications in the insulation sector, and some production problems coupled with good demand had tightened availability.

In spite of the tight supply situation in the PS market at the moment, styrene remained the main driver for PS pricing.

Some PS producers expressed frustration that this was the case, as the supply-demand balance was such that in their view this should be the leading factor for PS prices. At least one major producer seemed intent on retaining this monomer link to PS.

Styrene monomer spot prices had fallen in November, leading to industry expectations of a drop in the December monomer contract price. Most PS sources expected any price erosion to be transferred to the PS market.

European PS producers’ margins had improved in 2010, but they pointed out that these had risen from a very low base in previous years. Poor margins had been the main reason for cuts in PS production in Europe.

PS consumption suffered badly as technological advances in flat-screen technology led to a slump in PS demand.

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

Stryene and PS Europe

($1 = €0.73)

For more on polystyrene visit ICIS chemical intelligence
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By: Linda Naylor
+44 20 8652 3214



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