28 June 2013 18:16 [Source: ICIS news]
LONDON (ICIS news)--The EU's external trade surplus for polystyrene (PS) with the rest of the world increased between February and March, according to data released by Eurostat.
The figures showed that the volume of imports into Europe declined from 5,977 tonnes to 5,505 tonnes, month-on-month, while exports registered a gain of 3,566 tonnes, to 23,323 tonnes.
Short-term fluctuations in trade flows can be quite large. Perhaps more significantly, the data for March, the latest month for which information is available, reveal that imports rose, year-on-year, by 12.5%, from 4,894 tonnes in March 2012.
A possible explanation for the rise in imports could be the arrival in Europe of material from the new E-STYRENICS (Egyptian Styrene and Polystyrene Production Company) plant in Alexandria, Egypt.
First commercial supplies began to enter the continent early this year, following a lengthy gestation period. It is widely expected that PS from this source will become an established feature of the European market over the long term, although European producers have repeatedly expressed their view that it will not pose a serious threat to their business, particularly as they are currently running at high operating rates, following reductions in capacity last year.
However, the increased volume of imports into Europe needs to be put in perspective.
First, while total imports in the first quarter of this year were one-third higher than during the same period of 2012, the tonnages in Q1 2011 were almost one-half greater than in Q1 2013, suggesting that no clear trend has emerged.
Second, export growth has also shown substantial growth. Exports were sharply higher in March than in February but were 16.5% higher than in the same month last year.
The volume of sales of European PS outside the EU were 7.5% higher in the first quarter of 2013 than in Q1 2012, and 11.4% above those for Q1 2011. The rise, in terms of value, was even greater. At almost €97.25m, the increase was 20% compared with two years previously. Spurred on by higher raw material prices, the increase over 2012 was an even larger 23.7%.
What the Eurostat figures reveal is that there is a clear, positive trade balance between the EU and the rest of the world. Although the magnitude of that surplus was rather less in Q1 2013 than in Q1 2012, it is greater than two years ago. The ratio of exports to imports, in both volume and value terms, was 3.6 to 1 in the first quarter of this year.
The reasons for this positive trade balance are open to speculation. Consumption in Europe has been declining, along with production capacity. A distributor commented this week that European producers are making less PS in response to this.
A trader said on Friday that prices of Asian material, especially high impact polystyrene (HIPS) have been uncompetitive, for some time despite buyers' complaints about the high price level in Europe.
The total amount of PS imported into the EU and exported from it are still small relative to capacity and sales within the region and the trade figures therefore need to be kept in proper perspective. Producers commented on Friday that the volume and value of imports are comparatively insignificant.
One producer said the external trade balance has historically been in surplus for Europe, and cautioned that he would not feel comfortable interpreting an individual month's or even a single quarter's data but preferred to look at annual numbers.
In 2012 as a whole imports were 52,222 tonnes, compared with 90,027 tonnes in 2011, while exports amounted to 262,447 tonnes, compared with an annual total of 221,576 for the previous year, according to Eurostat.
($1 = €0.77)
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