EPCA ’12: Europe styrene supply to face further challenges in 2013

BUDAPEST (ICIS)–The closure of Switzerland-headquartered producer INEOS’s styrene monomer (SM) and polystyrene (PS) units at Marl in Germany will keep European styrene supply limited in 2013, a consumer said on Monday.

“There will be less inventories,” said the consumer, speaking on the sidelines of the 46th annual European Petrochemical Association (EPCA) meeting in Budapest, Hungary. “A lot of smaller players making niche products will be without a main supplier, and this could change the dynamic of the market.”

With Europe looking towards imports in order to cover any shortfall in the styrene market, this could lead to further volatility on pricing if vessels face delays or any other logistical problems.

The market already saw sharp price spikes in September, when Hurricane Isaac delayed the arrival of US imports that were brought into Europe to help alleviate the domestic tightness owing to reduced production output.

“Benzene will continue to behave as it did this year,” said a styrene trader. “If crude stays high this will be reflected in benzene and styrene pricing.”

However, one expandable polystyrene (EPS) producer pointed out that high styrene prices do not mean high profits for suppliers.

“With the type of money involved when costs are this high, there are always credit risk issues,” said the source. “Of course, high prices mean that the end-use markets like automotive and construction will lead buyers to look at alternative like polyurethanes [PU] and mineral fibres.”

The annual EPCA meeting runs from 6-10 October.

($1 = €0.77)