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Europe PS buyers pay higher prices due to tight supply

November 22/2010

(ICIS) -- European polystyrene (PS) buyers have been forced to pay increases of around ?50/tonne ($68/tonne) in November due to the tight supply in the market, sources said on Monday.


The increase was short of initial targets, which were as high as ?100/tonne, but it covered the increase in the upstream styrene monomer (SM) contract for November.


General purpose PS (GPPS) prices were trading at a minimum of ?1,300/tonne FD (free delivered) NWE (northwest Europe) to smaller and medium-sized buyers, while large buyers enjoyed discounts. In July, GPPS prices were at ?1,220/tonne FD NWE, but have risen steadily since then.


Some producers now saw PS as structurally undersupplied in Europe after permanent closures in 2009, which followed an earlier cull of installed PS in 2006. PS demand had picked up, supported by improved applications in the insulation sector, and some production problems coupled with good demand had tightened availability.


In spite of the tight supply situation in the PS market at the moment, styrene remained the main driver for PS pricing. Styrene monomer spot prices had fallen in November, leading to industry expectations of a drop in the December monomer contract price. Most PS sources expected any price erosion to be transferred to the PS market.


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