Europe July PS prices rise on higher feedstock costs

18 July 2014 23:59 Source:ICIS News

LONDON (ICIS)--European polystyrene (PS) prices have risen on average by €60/tonne in July on the back of a spike in feedstock styrene monomer costs, despite soft demand, sources said on Friday.

The European styrene barge contract for July was agreed at an increase of €82/tonne from June.

Three European PS sellers indicated that July prices rose between €80-95/tonne from June. One producer noted that it reduced its price target from increases of €100/tonne at the start of the month to €80-85/tonne.

It said it has settled about 80% of its contracts, but noted that demand is weaker than in June, partly due to the impact of the European summer holiday season in July and August, but also because of weak demand on the back of a cost hike and some pre-buying in the previous month.

It noted that despite the price hike it was unable to maintain its margins. "From my point of view, the styrene monomer increase was passed through. Margin improvement did not work," it said.

Distributors indicated price increases of €50-70/tonne.

"Seems to be very quiet. I'd say crystal [general purpose polystyrene] (GPPS) at €1,570/tonne, high impact polystyrene (HIPS) at €1,670/tonne [for July]," a distributor said.

Buyers confirmed July contract settlements up €50-100/tonne from June.

"It is clear there was an increase [in July PS prices]. Styrene monomer rose €82/tonne, but it is very difficult to transfer this to [expandable polystyrene] EPS and PS," a buyer said.

On average, European PS prices in July were assessed to have risen by €60/tonne, based on market feedback.

The majority of market players indicated that demand is weak in July, though consumers in the packaging and appliances sectors were more bullish, noting it is the peak season for demand.

Some bearish players attributed the weak demand to the summer holiday season, others to the high feedstock price increase pushing players to the sidelines and others to some pre-buying in June in anticipation of higher July prices.

Several buyers noted that domestic European PS prices are too high and uncompetitive against imports. A few buyers said they are increasingly turning to imports to satisfy their monthly requirements. Other buyers said they are trialling imported material with a view to establishing regular supply from foreign sources.

A buyer said: "Many imports from the Middle East and the Far East are at lower prices than European producers. We are importing 30-60% from the Middle East, Pakistan, India, Russia."

Another buyer said that the high prices in Europe mean it is now trialling imported material from Egypt and Russia.

By Iain Packham