Demand slowdown yields polystyrene surplus

Nov. 16, 2005
A global oversupply of polystyrene has resulted from slower-than-anticipated demand growth in China and extensive capacity additions, reported Chemical Market Associates Inc., Houston.

By OGJ editors
HOUSTON, Nov. 16 -- A global oversupply of polystyrene (PS) has resulted from slower-than-anticipated demand growth in China and extensive capacity additions, reported Chemical Market Associates Inc. (CMAI), Houston.

CMAI's 2006 World Polystyrene-Expandable Polystyrene (EPS) Analysis, covering 2000-10, said that despite China's recently slowed demand for PS, the country continues to drive demand growth for the chemical. In 2000-03, while global PS consumption decreased, China's consumption increased by 640,000 tons.

Chinese demand growth in 2004 and 2005 is expected to be lower than it had been in previous years, CMAI said.

Worldwide PS demand has been suppressed by high product and raw material prices, which have encouraged product substitution and increased use of recycled or reprocessed material, especially in China.

But CMAI expects PS prices to ease and demand growth to recover. Because propylene prices likely will remain high, PS will not face strong competition from polypropylene.

PS demand will be lower than forecast if crude oil prices remain at current levels, CMAI said. Since tightness of the benzene market has eased, the crude price remains the main factor in the PS price.