European polystyrene prices rising on increased styrene costs

16 August 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--European polystyrene (PS) producers are achieving higher prices in August on the back of steeper styrene costs, market sources confirmed on Friday.

The size of the increase is around €50-55/tonne, sources said, although many contracts remain to be settled. Much business, as in most months, will be settled only near the end of August.

With styrene monomer costs having risen again this month, including the €47/tonne hike in the barge contract price, the magnitude of the increment in producer revenues is not as substantial as it might appear.

However, the increases seen so far do represent a modest improvement in the spread between monomer and polymer, to the benfit of PS producer margins.

The recent major falls in the cost of butadiene (BD) - a raw material in the production of high impact polystyrene (HIPS) - has put pressure on PS producers to reduce the premium charged for HIPS over general purpose polystyrene (GPPS).

Conversely, the HIPS sector of the market is tight and producers are reluctant to give up a surcharge that they had to fight hard to secure when BD prices were escalating.

Two producers have responded by selling HIPS at a slightly lower increment than for GPPS this month, although this amounts to only about €5/tonne. A third producer says it is, for the present, making no change to its current policy.

The PS price, now at historic high levels, is resulting in bitter opposition from many consumers. One said that price levels were "killing the business", and said some converters would probably exit the market. The GPPS price is assessed by ICIS Pricing's distribution indicator at €1,620-1,665/tonne FD.

($1 = €0.75)

For more on polystyrene visit ICIS chemical intelligence.

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By: Peter Gerrard
+44 208 652 3214



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