AMSTERDAM (ICIS)--Further consolidation, industry engagement for downstream demand as well as innovation and advocacy will be key for the future of the slow-growth, supply driven European styrenics industry, an executive at German chemical major BASF said on Thursday.
Klaus Ries, vice president for styrenic foams at BASF, stressed that downstream production is vital so that upstream continues to exist, and questioned if the styrenics business is really in a good shape.
“Styrene growth is really limited; Asia is taking the lead, but the rest of the regions are mostly stagnating,” said Ries.
Focusing on the styrene market fundamentals, Ries said that, in west Europe, overcapacity is still substantial despite some plant closures while imports – from the US and the Middle East – are standard during the peak demand season.
“However, EPS is the only styrenic polymer which can grow significantly if the political framework is set adequately in the EU to foster the energy efficiency of buildings," Ries added.
“PS demand has levelled out and follows a negative trend, while ABS [acrylonitrile-butadiene-styrene] is relatively stable, but it is a smaller market.”
The BASF executive was speaking at the 16th ICIS World Aromatics and Derivatives conference in Amsterdam, the Netherlands.
Ries also commented on styrene margins and argued that although they eroded in the past decade, there seems to be some sort of recovery during the last three years.
Still, the styrene market remains volatile as showed by the delta margin development in 2017.
“From February to April this year, some domestic turnarounds and an unexpected stall of US imports made Europe styrene prices spike, while an outage in July brought them back up after a softer second quarter,” he said.
“Then, a refinery fire in Europe in August complicated things again but the biggest disruption came from Hurricane Harvey later that month,” added Ries, pictured right.
“[The current situation for] Styrene [shows that] is not a demand-driven market, but a supply-driven one, while the lack of investment is leading to ageing plants and this seems difficult to change in the next ten years or so,” he said.
The BASF executive said he was not very optimistic about demand while he stressed that there are more challenges than opportunities in the near future.
“There is a lot of regulatory pressure on plastics including styrene; luckily, both styrene and its derivatives are probably the best researched plastics. Meanwhile, other challenges include bio-populism as well as marine litter and the lack of styrene based innovation,” Ries underlined.
Ries concluded referring briefly to the ongoing anti-dumping investigation taking place in China for imports coming from the US, Taiwan and South Korea, an investigation which could prompt preliminary rates being announced as soon as February.
“Indeed, China’s increasing self-sufficiency will influence global trade flows and arbitrage windows. It is expected that US and South Korean exports into China will be disrupted,” he said.
“Regarding anti-dumping, one theory is that US material might start coming more and more into Europe but also Europe will need to find export opportunities. Still, everything is very theoretical and we have nothing official in hand.”
The 16th ICIS World Aromatics and Derivatives conference runs on 8-9 November.
Pictured above: UK artist Paul Cocksedge's 'Styrene' lamps
Source: Nils Jorgensen/REX/Shutterstock
Focus article by Vasiliki Parapouli