05 June 2013 18:14 [Source: ICIS news]
LONDON (ICIS)--Two European polystyrene (PS) producers have announced that they intend to raise prices this month, drawing mixed reactions from market participants on Wednesday.
Styrolution and Styron, two of the four major European producers, both stated on Tuesday that they would increase prices for general purpose polystyrene (GPPS) and high impact polystyrene (HIPS).
Both producers aim to raise the GPPS and HIPS numbers by the same amount, although Styron is targeting a hike of €40/tonne ($53/tonne) for both grades, while Styrolution is seeking €25/tonne.
Significantly, both targets are higher than the €14/tonne rise in the styrene monomer barge contract for this month, thus signalling a clear intention to improve margins by increasing the spread between raw material and polymer.
A distributor said: "If any time is when they are going to get [a price increase], it will be now."
The distributor believed that the European PS supply has tightened, and producers would probably succeed in gaining a €15-25/tonne rise in the next couple of weeks, with the size of a final price movement later in the month being less certain.
A large buyer in the packaging industry said the market had probably become more balanced, but added that a production halt by Synthos due to flooding might create fears or rumours of greater tightness.
The buyer agreed with the distributor that demand was generally steady, but the buyer was more sceptical of price increases for two reasons.
Firstly, consumption of certain lines of food packaging has been a little delayed because of the cold spring.Secondly, and more importantly, the buyer referred to the significant price gap that has opened up between PS and polypropylene (PP), which can often be used as an alternative to PS. Currently, that difference is assessed by ICIS at more than €300/tonne, with the GPPS Distribution indicator standing at €1,550-1,590/tonne FD and PP homopolymer injection grade at €1,230-1,250/tonne FD.
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