OUTLOOK ‘15: Feedstock prices to take centre stage for LatAm PS

HOUSTON (ICIS)–Latin American polystyrene (PS) markets have had little variation all year and have not shown great differences from country to country, a trend expected to continue in 2015.

The main difference in 2015 is that PS prices will start the year from a lower point, considering that the decline in crude oil prices is having a large impact on the main raw materials for PS (benzene, ethylene and styrene).

As a mature market, global polystyrene demand is expected to grow at less than 1%, a much smaller rate than that of other plastic resins such as polyethylene (PE) or polypropylene (PP).

This is one of the main reasons why major producers have been getting away from this commodity, seeking to invest in markets with better growth perspectives.

Gains in PS have been confined by the price of competing PP resins. Additionally, recycled material and plastic cardboard (plastic coated cardboard) have become formidable new competitors for virgin PS.

The acquisition of Brazil’s Innova by Videolar has been completed at the end of 2014 with the blessing of the local regulators. The merger of assets may continue into 2015.

Producer Unigel has two PS plants in Brazil, but has hibernated one of them throughout 2014 to keep costs down. This could continue in 2015, and it constitutes solid evidence of excess capacity in that country.

Prices have moved within a narrow band in 2014 and this trend is expected to continue in 2015.

Argentine producer Petrobras Energia has made great strides in profitability during the last year despite labour problems that have diminished production.

Stringent import regulations in Argentina and Venezuela have kept competitors at bay. PS prices in these two countries remain the highest in the region.

With its proximity to the US and no trade barriers because of the North American Free Trade Agreement (NAFTA), Mexico’s PS prices have remained the most competitive in Latin America.

Chile has no domestic PS production and depends entirely from regional suppliers and imports from the US Gulf or Asia to supply its needs. This is expected to remain unchanged in 2015.

There are no new PS projects in Latin America, and if something is going to change in 2015 that could be the ownership of some plants.