LONDON (ICIS)--January European polystyrene (PS) prices have settled at an average increase of €35/tonne, in line with higher feedstock styrene costs, although soft demand in a competitive market kept a lid on increases.
Sources indicated that a combination of cheap imported Asian material, low demand and strong competition led producers to pare back initially higher price expectations.
At the start of January, producers were seeking increases of €50-70/tonne, to boost margins.
One producer said it has settled its January polystyrene price at an average increase of €35-40/tonne. This was confirmed by several buyers.
Demand in January has been seasonally soft and sources said offtake has been slow to pick- up in the new year, though demand is said to be growing.
“I don’t think demand is very strong, no one is pre-buying, no-one is holding high inventory levels. People are still buying almost on a hand-to-mouth basis,” a buyer said.
Other buy-side sources said there was significant price competition between European producers during the month as they jostled to gain market share amid weak market fundamentals.
“What we’re finding is that there is a lot of competitive pricing, competitors are trying to buy more market share,” a distributor said.
Furthermore, another distributor said that the comparatively low price of imported material from Asia has tempted buyers that would not normally acquire it.
It said this has caused a rift in market prices and resulted in European PS producers offering significantly more favourable prices to larger buyers than smaller ones, in an effort to secure market share in the face of stiff price competition. This was not, however, confirmed on the sell-side.
Looking ahead, price expectations for February are unclear due to volatility and lack of clarity over feedstock pricing, particularly benzene and styrene.