23 September 2013 00:00 [Source: ICB]
Record-high September expandable polystyrene (EPS) pricing in Europe has slashed demand and forced producers to reduce production, sources said.
European EPS packaging, insulation and flame retardant insulation grade prices rose by €85-90/tonne to a record high of €1,775-1,835/tonne FD (free delivered) NWE (northwest Europe), due to increases in the upstream feedstock styrene monomer.
From August to September, European styrene rose by €85/tonne to €1,542/tonne FOB (free on board) Barge ARA (Amsterdam-Rotterdam-Antwerp).
EPS producers initially sought to raise prices much higher than the monomer increase, but lower demand, particularly in packaging grade material, meant they were only able to achieve slight increases above the monomer hike.
Buyers and distributors said they are holding off from buying at this high price for as long as possible, running down inventories instead.
Several producers said they have reduced production in line with reduced demand. One said that demand is down by 10-15% compared with September 2012.
A buyer also said that demand from its end-user market has fallen by about 10% year on year.
Meanwhile, European polystyrene (PS) prices in September have settled in line with the upstream monomer hike at the start of the month.
Buyers are taking a wait-and-see approach, running down stocks before settling contracts, because the record-high prices leave them with thin margins, as end-users struggle to accept price increases.
General purpose polystyrene (GPPS) settled up by €85/tonne to €1,705-1,750/tonne and high impact polystyrene (HIPS) settled up by €80-85/tonne to €1,795-1,845/tonne, for September from August.
“PS has never been more expensive than this September,” one major producer said.
“Customers prefer not to buy. They’re running down stock,” said another.
Both producers have adjusted production in line with lower demand, but declined to say by how much.
One GPPS buyer said it has reduced its order volumes by 40% in September, due to the large price hike and the difficulty in passing on the increases.
Two others noted that they have seen at least one major GPPS customer examine the possibility of using alternative materials such as polyethylene terephthalate (PET).
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