Europe EPS market troubled by record-high prices

06 September 2013 18:07 Source:ICIS News

European expandable polystyrene (EPS) suppliers and buyers were voicing concerns on Friday over the long-term viability of the market as record-high prices push end-market users to consider cheaper products with less price volatility.

Both sides of the EPS market have placed blame squarely on the shoulders of upstream styrene manufacturers, which they accuse of short-term profiteering at the expense of the wider market.

One buyer said styrene producers were "irresponsible" in protecting their margins at the expense of others.

Both EPS producers and buyers alike are worried that prices could continue to rise. Participants are worried another price hike could be a further 'nail in the coffin' for EPS.

In the face of record high, and potentially still rising, prices, buyers say they will buy as little product as possible in September, even though this could open them up to greater problems if prices push further ahead in October, in line with market expectations.

Despite the concern, however, suppliers and buyers are still seeing good demand, although it remains to be seen how long this will last for and at what cost.

One buyer noted that the industry is in “survival mode", and said that its margins have shrunk so much that it is now loss-making. “We’re losing money on every kilo we sell,” it said.

The buyer warned that, with EPS prices at record highs, end users are looking to use alternative materials.

"If the same situation occurs next year, they [styrene producers] will have ruined their own market," it said, adding "it will happen very quickly".

By Iain Packham