Struggling Polystyrene Industry Catalyzes Restructuring While Expandable Polystyrene Continues Ahead
Tuesday October 16, 10:15 am ET
HOUSTON, Oct. 16 /PRNewswire/ -- Chemical Market Associates, Inc. (CMAI) reports that difficult conditions largely due to slow demand growth has catalyzed an unprecedented restructuring among the polystyrene producers in North America and Europe. Companies are forming joint ventures or selling and exiting the business. Excess capacity continues to be rationalized while new capacity emerges in Asia and the Middle East. Expandable Polystyrene (EPS), on the other hand has enjoyed solid demand growth on a global basis. As a result, the restructuring in styrenics in the mature regions has generally left EPS unscathed. The recently completed 2008 World Polystyrene/Expandable Polystyrene Analysis examines these effects and provides clients an outlook for the global polystyrene and expandable polystyrene markets for the period 2002-2012. Topics covered in this analysis include capacity, supply/demand, trade, prices, profitability, technology and production costs. Online access to this data allows market participants to get updates in real time as deals and transactions are executed or units are built or shut down.
This study leverages all of CMAI's worldwide consultants to offer a global view of the major strategic issues facing this important industry, including:
The lack of demand growth is now endemic in the polystyrene business. Polystyrene stands out amongst the major thermoplastics and other styrene derivatives as the most challenged product in terms of growth. There are some areas of growth, but the markets in general remain well below peak volume levels. Therefore, it is more or less expected that the polystyrene markets in the "developed" areas such as Japan, Western Europe and North America should be in decline since many end uses have already migrated offshore to lower labor cost "factory" countries such as China. However, Asia is not growing either and Northeast Asia has seen demand decline for four years in succession.
The next stage is for polystyrene capacity to be added on the back of styrene projects that themselves are based on the availability of low-cost feedstock rather than local demand. Therefore, CMAI experts have developed a supply/demand scenario that includes a new, competitive, world-scale, export oriented unit in Qatar. This new unit is in addition to the similar units planned in Iran and Saudi Arabia. The lack of demand growth and the upcoming new capacity has caused an unprecedented industry restructuring in North America and Europe. In North America, all but one of the top six polystyrene producers are expected to exit or joint venture the business ushering a new era of fewer but larger and more integrated producers.
EXPANDABLE POLYSTYRENE OVERVIEW:
The world EPS market made a spectacular recovery in 2006 and is performing very strongly again in 2007. Almost every major market in the world did well, the notable exception being North America and Southeast Asia. Attributable to strong regional economic growth, the best performer of the major markets was Western Europe which was one of the laggards during the preceding three years. Europe outperformed China by some distance in terms of growth, but China remains the largest market in the world. In the case of EPS, persistently high energy prices have kept energy conservation and insulation, two properties playing to EPS strength, high on the agenda.
China remains the largest market with 32 percent of world demand. It has recovered from the 2005 contraction and is expected to continue to enjoy healthy growth. It has now assumed a new role as one of the major exporters to the world market. Its substantial domestic demand growth is construction driven. The packaging sector is more closely related to world GDP growth and China's exports of finished goods. Other regions grow at a slower rate. In the end, CMAI experts forecast China to account for over 50 percent of global growth on average through 2012, raising its market share to 35 percent by the end of the forecast period.
The 2008 World Polystyrene/Expandable Polystyrene Analysis is available in book or CD-ROM format. Online Capacity and Supply/Demand databases create a full spectrum of knowledge pertinent to these markets. The study covers ten global regions and more than fifty countries and also includes supply/demand forecasts, technology analysis, trade, price forecasts as well as other issues that affect the PS and EPS industries.
CMAI is a petrochemical, plastics, fibers and chlor-alkali consulting firm that services a wide range of companies all over the world. Since 1979, CMAI's goal has been to provide accurate, timely consulting services for the worldwide industries that it covers. CMAI maintains offices in Houston, New York, London, Dubai, Dusseldorf, Singapore and Shanghai. Clients to CMAI services include chemical and oil companies, engineering & construction companies, banking and financial institutions, plastic converters, grocers/retailers, government agencies and trading companies.
Source: Chemical Market Associates, Inc.
Engineering News Archive