Polystyrene

17 September 2001 00:00 [Source: ICB]

Future growth will come from eastern Europe and Asia, where Chinese demand will remain the driver for world markets

Uses

Polystyrene (PS) is available in several forms: general purpose (GPPS), medium impact, high impact (HIPS) and expandable (EPS). Packaging is the largest consumer, with about 31% of total global demand. PS also has outlets in various consumer and commercial products with major applications in domestic appliances, construction, electronics and toys. Durable goods, including housewares and furniture, take 19% of worldwide output.

Supply/demand

West European production is estimated by the Association of Plastics Manufacturers in Europe (APME) at about 2.35m tonne last year, with total sales just 3000 tonne less. Sales into western Europe reached just over 2m tonne in 2000, with 337 000 tonne sold outside the region. Overcapacity and pressure on margins forced producers to cut production by 20-30% in quarter two. Dow's Schkopau unit restarted in June following closure in May. Plants are still running at reduced rates, which is set to continue until demand improves. Production cutbacks have stabilised the market and helped to halt the slide in prices. However, consumption remains sluggish and converters are said to have low stocks. Suppliers report a slow start to September, although they expect a better second half year. Consultancy CMAI estimates demand for first half 2001 is down by 5% compared to 2000. However, last year was divided into a strong first half and destocking in the second and demand in 2000 finally registered a 3% drop, according to CMAI. Atofina has delayed its new 60 000 tonne/ year line at Carling until quarter four from its original schedule of mid-2001.

Pricing

European prices have plummeted this year from levels of DM2.08-2.20/kg for GPPS in January. However, prices appear to have bottomed out as producers have succeeded in rolling over accounts or gaining small increases in July/August taking August's range to DM1.62-1.65/kg for GPPS. Small UK buyers are quoted as paying £550/tonne in August although £530/tonne was also heard for pockets of material. Producers are still trying to push prices up in an effort to improve margins, but are struggling in the face of weak demand, and the E135/tonne slump in the quarter three styrene price. Some suppliers announced formal hikes of 10 pfg/kg or 15 pfg/kg for September while two major producers are continuing efforts to implement rises of 20 pfg/kg announced for both June and July. Early reports on September contracts point to small rises of up to 5 pfg/kg on some accounts. Producers say they will continue to press for price increases in October. Although producers continue citing poor margins, CMAI notes they have improved this quarter. Negative first half margins of minus E80/tonne on a cash cost basis have swung round to E35/tonne on the back of the styrene cost reduction and producers managing to hold on to PS prices.

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Technology

There are three types of processes in general use: suspension, solution and mass (bulk) polymerisation. The solution route, which can be a continuous or batch operation, has the advantage of low residual monomer content and high purity polymers. The suspension route produces polymers of different molecular weights and can make specialist crystal and high impact grades. The main advantages of the mass polymerisation process are the clarity and excellent colour of the resins. Dow Chemical and Idemitsu have developed the use of metallocene catalysts to produce syndiotactic PS, which has a highly regulated stereo structure and a crystalline nature.

Outlook

PS is a mature product and its consumption tends to fluctuate with the level of economic activity. CMAI has downrated future growth in western Europe and the US to GDP rates at best, although some industry players voice growth still slightly ahead of GDP. Growth in less developed regions like eastern Europe and Asia is much higher, and China remains key to future growth as it will continue to be responsible for half of world trade. Players are expecting more rationalisation in Europe and Asia as there are still too many players globally. Atofina's second phase 60 000 tonne/year expansion at Carling is scheduled for 2003, and a 230 000 tonne/year expansion in Carville, US, is due mid-2002. BASF and Nizhnekamskneftekhim are currently planning a 120 000 tonne/year facility in Russia for 2004.

EUROPEAN POLYSTYRENE CAPACITY, '000 TONNE/YEAR

Company	Location	Capacity
Arpechim	Pitesti, Romania	25
Atofina	Carling, France	130*
	Gonfreville, France	160
	El Prat de Llobregat, Spain	100
	Stalybridge, UK	110
BASF	Antwerp, Belgium	350**
	Ludwigshafen, Germany	250**
	Tarragona, Spain	50**
BP	Marl, Germany	180
	Trelleborg, Sweden	70
	Wingles, France	150
Chimcomplex Borzesti
	Borzesti, Romania	35
Dow Chemical
	Barry, UK	80
	Bilbao, Spain	70
	Lavrion, Greece	30
	Schkopau, Germany	130
	Terneuzen, Netherlands	50
	Tessenderlo, Belgium	260
Dunastyr	Szazhalombatta, Hungary	80
Dwory	Oswiecim, Poland	50
EniChem	Feluy, Belgium	150
	Mantova, Italy	200
Kaucuk	Kralupy, Czech Republic	87
Linpac	Sherborne, UK	20
Lukoil Neftochim
	Burgas, Bulgaria	70
Nova	Carrington, UK	180
	Breda, Netherlands	120
Petkim	Yarimca, Turkey	27
Polimeri	Zagreb, Croatia	57
Styrochem	Porvoo, Finland	12

* An extra 60 000 tonne/year to start up Q4 2001
** estimates preconfirmation from plant restructuring
Source: ECN/CNI

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