LONDON (ICIS)--Cold weather and participants waiting for the conclusion of the upstream styrene barge contract before negotiating February prices has led to a quiet European expandable polystyrene (EPS) market this week, sources said on Friday.
Demand for the month has been varied, with pre-buying elevating sales at the start of the month as transformers anticipated higher costs later in the quarter and also engaged in re-stocking activity after the year-end break.
However, consumption downstream was sluggish for a second half of the month as heavy snow in parts of northern and central Europe and severe cold weather in other key markets halted construction work, impacting insulation buying appetite.
“Due to the weather conditions, we see, mainly in the last few days [and] last week, a rapid slowdown of the market,” one buyer commented.
Adding to this, availability was said to have mostly recovered after the production issues in Q4 2018, despite talk of a longer than expected planned turnaround in the market over the Christmas period.
In some southern European markets, offers of Iranian material were said to be quite competitive versus domestic prices and could well be pressuring sellers in that region, although it was unclear how much material was actually on offer.
Looking ahead, poor weather conditions could well influence price negotiations as much as any potential firming in upstream styrene monomer costs that many now anticipate.
Amid re-stocking and pre-buying this month and cold weather slowing insulation consumption downstream, demand for EPS could potentially slow and as a result put pressure on sellers not to hike prices, especially if supply remains healthy and competitive offers from suppliers outside of Europe continue.
Many participants now expect upstream costs to rise in February by low double-digits, based on the current spot styrene trends and dollar-to-euro exchange rate.
With a heavy scheduled of planned turnarounds anticipated to begin in March, many continue to expect tightening upstream supply to put upward pressure on EPS prices that month, although this remains to be seen.
EPS is a rigid form of polystyrene (PS) used in construction and packaging applications.
Focus article by Ciaran Tyler.
(Picture source: REX/Shutterstock)