Europe PS may be heading for smaller-than-expected price rise

16 January 2014 17:25 Source:ICIS News

LONDON (ICIS)--Players in the European polystyrene (PS) market on Thursday said prices are rising again in January in the wake of another increase in the styrene monomer contract.

However, there are signs that the rise is lower than what sellers had been hoping for.

Styrene went up by €35/tonne in January but PS producers initially targeted increments that substantially exceeded a simple pass-through of the raw material number.

Many players returned quite late to the market because of holidays and the timing of the New Year’s Day holiday, but buyers have now reacted angrily to the proposed hikes, which ranged from plus €50-70/tonne.

Several purchasing executives said they had had to accept a price rise from their suppliers but that this increase was not more than the move in styrene.

Even so, some expressed indignation at facing a further uplift in their raw material costs. One buyer in the UK described the continued rises as “ridiculous” and accused sellers of losing a sense of reality.

Other buyers said they had not yet settled their January contracts, but expected to pay increases in line with the feedstock rise. One said its downstream demand was virtually non-existent, and it therefore did not need to make any orders for January delivery.

A producer acknowledged that it had been obliged to scale back its original target, which would have afforded it a large expansion in the spread of PS over styrene.

It stated that it had settled contracts with many medium sized customers, at increases of around €45/tonne. Larger consumers, typically in the packaging industry, usually settle their contracts at the end of the month.

By Peter Gerrard