EPS lengthens on expected November price drop

25 October 2013 18:09  [Source: ICIS news]

LONDON (ICIS)--European demand for expandable polystyrene (EPS ) has dipped this week as most market participants anticipate a price drop in November, on the back of an expected price drop in the feedstock styrene monomer. Expectations of a reduction in the feedstock stem from recent weakness in the spot price.

Generally, EPS demand has held up well in October, benefitting from a long, warm and dry autumn that has kept demand for insulation material from the construction sector high. Demand is expected to last as long as the mild weather holds.

Buyers, however, are continuing to order on a hand-to-mouth basis due to price volatility over recent months and the expectation of lower prices in November.

Producers and converters are also cautious, saying that the recent price volatility has left their margins thin. They will seek to retain as much of the price drop in styrene as possible and pass on as little as possible to buyers.

“The whole industry has to think about margin protection. Margins are extremely squeezed from earlier months. Business is not really healthy in terms of profitability,” a northwest Europe producer said.

Nevertheless, the EPS market is also getting a further boost from improving demand for packaging in the run up to Christmas.

“The market is active. Sales are doing well. October seems good in terms of volume, and good demand is expected in November, based on our forecasts,” another northwest Europe producer said.

By: Iain Packham

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