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Styrenics industry enjoying boom times

Posted on November 18th, 2016 by in Chemicals Industry News and Analysis

Packaging styrolution


Despite the global economic volatility and the concerns that rise from the unstable financial markets, the styrenics industry seems to be going against this trend and to be experiencing a rather profitable period.

Rhian O’Connor, senior analyst in ICIS Consulting and Analytics, explains that 10 years ago the polystyrene (PS) and acrylonitrile-butadiene-styrene (ABS) industries were amongst the worst performers in the global chemical industry.

“PS in particular had declining consumption in mature markets such as western Europe and North America,” she added. Profitability for most of the styrenics chain was dire, rising benzene costs and easy substitution was squeezing the whole chain.

“When Lanxess was floated out of Bayer in 2006, their only answer for the ABS business was aggressive restructuring. Spreads of European styrene monomer over benzene went as low as $10/tonne in June 2012,” O’Connor points out.

However, it seems that in recent years styrene chain margins have gone from strength to strength.

“We estimate that PS margins for a European producer integrated into styrene have risen from around €234/tonne in 2012 to €677/tonne in 2016. Similar improvements are visible in Asia and North America.”

So what could have changed? For O’Connor, the main difference for the chain as a whole is the level of consolidation.

“BASF, Nova Chemicals and Lanxess’ former business together now form INEOS Styrolution, the world’s largest styrenics manufacturer. Dow’s former business is now Trinseo who have integrated their US business with Chevron Phillips to form Americas Styrenics,” she says.

ICIS Consulting underlines that together with this shrinking number of producers has come a shrinking number of plants as players chose to close small, non-performing assets and drive up operating rates at existing plants.

“On top of this the age of many assets in Europe and North America has meant that outages are frequent throughout the chain,” O’Connor says.

In 2016, a global recovery in demand and a tighter supply helped margins to strengthen further for polymer producers.

“This is due to a global recovery in demand at the same time as supply is tightened. This demand resurgence is due to a number of factors including better end markets such as electronics and automotive,” O’Connor explains.

However, one of the main reasons is lower substitution to other polymers.  “PS and ABS remain premium priced, but convertors and end consumers seem to have run out of other options. Simply put – those that could have switched to other polymers did over the last ten years.”

For ICIS Consulting there will be little to change these fundamentals in the near-future. “Little new global capacity is planned, even in areas still seeing substantial growth like Asia. Buyers of styrenic polymers have little market power and remain price takers against a largely oligopolistic producer base. Convertors and consumers are still trying to formulate alternative polymer solutions but future substitution should be slow,” O’Connor adds.

To find out how to read more news and analysis stories from ICIS, go to


All opinions shared in this post are the author’s own.

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