European EPS prices register modest rise in March

11 March 2011 23:59  [Source: ICIS news]

LONDON (ICIS)--Prices in the European expandable polystyrene (EPS) market have risen to €1,500-1,580/tonne FD ($2,055-2,164) for March, global chemical market intelligence service ICIS Pricing said on Friday.

The €20-30/tonne average increase is the third consecutive rise in the European market, although it is much more modest in scale than those encountered in the first two months of this year.

Once again, higher styrene monomer costs, and the need to recover them and, if possible, to widen spreads and profit margins, were cited as reasons for the price gains.

However, demand in the industry has still not picked up strongly, as the construction industry slowly emerges from its winter inactivity.

Some sources thought that the presence of Asian imports, and the growing threat of price competition from imported material, was significant in holding price increases below ambitious hikes that some producers had sought.

There was some deviation around the average increase, with some contracts showing increases at €50/tonne or more.  A distributor commented that “the result is pretty dispersed”.

Modest as the March increase was, compared with those in January and February, the fourth rise in the last five months was not welcome news for buyers.

A major converter in Germany said: “There were hard negotiations this month. Two consecutive rises really isn’t good.  Every increase is bad for us.”

However, the size of the increase, allowing for higher raw material costs, still afforded producers very little alleviation of their thin margins, and some had initially targeted a much bigger rise.

A trader said that this was not feasible so early in the year, noting that “it doesn’t make sense to have a big increase in March, which could provoke a huge wave of imports.”

He thought margin improvement for suppliers would be more achievable in months ahead, agreeing with the consensus view that volumes were likely to increase from the second quarter onwards.

($1 = €0.73)

For more on expandable polystyrene visit ICIS chemical intelligence

By: Peter Gerrard
+44 208 652 3214

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