Europe EPS predicted higher in May on strong demand, tightness

02 May 2014 15:38 Source:ICIS News

LONDON (ICIS)--European expandable polystyrene (EPS) producers are likely to seek margin improvement in May on a combination of strong and growing demand in the region and tightness in the availability of some grades, sources said Friday.

Prices are also likely to rise on the back of expectations of higher feedstock styrene monomer costs in May as benzene prices increased by €29/tonne.

European EPS producers say they will seek margin improvement in May, citing volatile feedstock costs in 2014 which have reduced profitability.

Sell-side sources say the tight availability of some grades, partially reflecting growing demand due to the peak season for construction, should enable them to achieve price hikes. One seller said it has an initial May target to raise prices by €50/tonne.

“We will look for further price expansion next month. Demand looks good, there is some tightness in the market, it should lead to a more sustainable situation for raw material (EPS) producers,” a seller said.

Another seller said: “Business was running better-than-expected in April. The May preview from our point of view is a good one, we’re quite optimistic for May business. I think a margin increase can and will be possible in May. Our goal is plus €50/tonne at the moment."

A buyer said that it has been receiving similar indications so has ordered early and secured some May deliveries at the April price.

“We’ve got supply contracted for the next few weeks, but this does not mean we will beat the inevitable. Price increases are unwelcome; we always get screwed on the way up and can’t pass it on fast enough.”

By Iain Packham