LONDON (ICIS)--European polystyrene (PS) prices in April have initially risen in line with higher feedstock styrene monomer costs, up €15/tonne, reflecting relatively soft demand amid the Easter holiday period, sources said.
A PS producer initially targeting a €20/tonne increase said that demand in April appears to be slightly below March levels, citing the impact of the Easter holiday period and the fewer working days.
“Demand in April is a bit lower than in March - so this is in line with our expectations,” it said.
Nevertheless, it estimated that European PS producers have been operating, on average, above 95% capacity since March, up from low 90% utilization rates at the start of the year.
“In February, due to very weak demand, the utilization rate of the [European PS] industry was very low, with demand improvement since March, we are back to more than 95%,” it said.
It said that so far in April, polystyrene prices have risen on average by €15/tonne, in line with the higher feedstock monomer costs.
Another PS producer targeting a €20/tonne increase in April said its prices have also risen by about €15/tonne so far in the month. It said the effect of fewer working days in the month is likely to impact demand, particularly from the packaging sector. Nevertheless, it is confident in a pickup in packaging demand in May.
“Demand is quite good, despite the fewer working days,” the producer said, adding: “I think we could see demand impacted a little from the less working days, in packaging mainly.”
Both producers noted some downward pressure on prices from cheap imports of PS from Asia and the Middle East, but both said the impact appears to be relatively minimal.
A distributor also noted large volumes of cheap spot material, imported from Asia and particularly the Middle East.
A large PS buyer said it has not yet settled its April contracts, but noted that European producers are targeting increases of up to €20/tonne. Nevertheless, it said demand in April appears to be very weak and so will be seeking rollovers. Furthermore, the buyer said due to the low cost of imported material, at sufficient quantities for its requirements, it is purchasing more of its material from overseas.
“[European PS] Producers are pushing to obtain €10-20/tonne increase, but the market is very weak, so we started to ask for rollover. At the same time we are buying a larger part of our needs from the Middle East and the Far East.”
A smaller PS buyer said that it settled its April contract at an increase of €15/tonne, saying that demand is in line with March levels.
“Demand is not very busy at the moment. April is flat on March with the Easter break,” it said.
A third buyer said it negotiated a rollover, despite sellers looking for increase. It said downstream demand has been strong throughout 2014, boosted by the favourable weather, noting it has been ordering above average quantities. Nevertheless, it cautioned that the uplift in demand in the first part of the year might come at the expense of demand later in the year, due to a potential rebalancing of activity.