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Europe styrenics players optimistic about new year

December 29/2011

(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.


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.

A source from one major styrene net producer said that the start-up of new downstream facilities in Egypt, Saudi Arabia and Turkey next year will mean that an additional 10% of demand for the monomer would be created, calling it a good sign.

However, the producer remains conservative about the outlook for European styrenics as a whole, citing concerns about the Chinese economy and its potential impact on the global landscape. 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.


I suspect it will push the overall number each month up by 23% when compared to the monthly average weve seen throughout 2011, said one trader. 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 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.


mrcplast.com

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