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Europe styrenics players optimistic about new year

December 27/2011

(ICIS) -- While the European styrenics market still faces some obstacles, a swathe of new derivative capacities starting up in 2012 and a robust expandable polystyrene (EPS) sector are keeping players optimistic about the new year. There is a lot of concern about the volatility of the wider economy of course, said one trader back in October. But at times its as if people cant see the forest for the trees. We are going to see a much tighter European market next year.

Speaking at November's European Aromatics & Derivatives Conference at Amsterdam in the Netherlands, Martin Pugh - president Europe, the Middle East and Africa at Frankfurt-headquartered producer Styrolution said styrene is undergoing a significant shift, with demand growth likely to overtake capacity additions in the next three years. This, he said, will lead to operating rates gradually returning to around 90%, from the 80% level seen since the end of 2008 as a result of the economic downturn.

And the start-up of these new polystyrene (PS) and EPS ventures in 2012 will in all likelihood prove to be a double-edged sword for the European market. Certainly, the increased output of PS from the export-driven Middle East will make next year challenging for domestic suppliers.

The emergence of a single European barge contract number seen ahead of the December settlement is also likely to be a key topic in 2012, with many players unsure of how the various parties will manage to reach a consensus each month. Many players are also carefully watching Styrolution and how its role in the market will unfold in the new year.

With 17 production plants in 10 countries, Styrolution is now the global leader in the production of styrene monomer (SM), PS and styrene-based copolymers, and number two in acrylonitrile-butadiene-styrene (ABS), chief executive Roberto Gualdoni said on the sidelines of the 45th European Petrochemical Association (EPCA) earlier this year.

The state of derivative markets fluctuates from sector to sector, with PS players somewhat concerned about 2012 because of the cheap imports expected to hit Europe from the Middle East.
The PS market, which has struggled with oversupply despite a 25% capacity reduction over the past five to six years, is forecast to grow by only 3%, while other derivative markets such as EPS and ABS may expect to see growth rates of up to 56% from now until 2014.

Among downstream sources, there looks set to be a cautious start to 2012, with ABS players concerned over the state of eurozone economies and the viability of the euro as a stable currency.
Buyers have been destocking and purchasing the minimum necessary throughout the fourth quarter of 2011, as the risk of recession and debt contagion filter through Europe, and several sources worry that this pessimism may continue into next year.

Author:Marina Ivanova
Tags:ABS, styrene.
Category:General News
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