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EPS producers to correct price offers

March 11/2011

MOSCOW (MRC) -- Low buying activity in the world markets force EPS producers  to correct price offer, according to ICIS-MRC Price Report. From the year start the growth of quotations for raw materials for EPS production exceeded all expectations. In particular, gain in price for styrene exceeded USD 200/t in Europe and USD 150/t in Asia. Considerable increase of price for raw materials made EPS producers increase price offer for their products.

Traditionally, Q1 of the year is characterized with low demand for products made of EPS, especially in the Asian markets. In terms of considerable growth of prices converters contracted volumes necessary for current work trying not to increase stock resources with expensive material.

EPS producers oriented at level of marginal profit higher than USD 150/t, though low demand for products resulted in forced growth of stock resources of materials. Term of EPS storage is not that long, e.g.: for the Asian material it makes to 6 months. The present conditions make producers decrease price offer in order to lower stock resources of materials.

At the same time a more considerable growth of materials quotations in Europe compared to Asia resulted in imbalance of  EPS price offers in Europe and Asia. As per market players, recently the difference reached EUR 150 Ц 200/t. In such situation producers are forced to make concessions, otherwise they may lose some volumes of EPS sales. 

Russian companies now face a complex situation. On the one side, in early March the supplies of materials contracted in February will be over, and new supplies are expected not earlier than in April. At the same time some grades of EPS produced by SIBUR-Chimprom have already been accepted and the contracts for multiple deliveries have been concluded with some Russian enterprises. It is expected that by the beginning of seasonal activity in the Russian market of EPS price offer for the material should decrease compared to  the current quotations.

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