08 October 2013 14:17 [Source: ICIS news]
BERLIN (ICIS)--While European styrene numbers have seen prolonged strength this year, downstream expandable polystyrene (EPS) players have struggled with poor demand, a situation that could continue into 2014, market players said on Tuesday.
“The spread between benzene and styrene has been consistently high this year,” said one EPS seller, speaking on the sidelines of the 47th annual European Petrochemical Association (EPCA) meeting.
“There has been a global styrene shortage with production issues and weak propylene oxide (PO) demand limiting PO/SM (styrene monomer) output.”
While government austerity measures have curtailed construction projects in the public sector this year, the seller also noted that there has been a sharp drop in private building and renovations as well.
“It’s a self-imposed austerity,” the seller explained. “Germany for instance currently has a record high savings rate. People are buying consumer good but not investment goods.”
While the 2008 downturn saw a drop in new construction activity, the EPS market was still supported by ongoing projects that kept demand strong into 2010 at least. However, with subsequent construction demand limited, the market has struggled in recent times.
2013 has seen INEOS announce that it will stop production on EPS at its site in Marl, Germany by the end of the year. The plant has a capacity of 100,000 tonnes/year.
There is also talk that another smaller integrated EPS producer will be closing a plant due to poor economics and demand.
Meanwhile, expectations for European styrene next year are largely bullish, with the domestic supply/demand balance still dependent on US imports.
The EPCA meeting runs from 5-9 October.
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