Global Polystyrene scenario in this decade

07-Nov-05

Despite recent slowdown in growth, world demand growth for PS continues to be driven by China, as per a study has conducted by CMAI on global PS and EPS markets from 2000 to 2010. Slower than anticipated demand growth in China and extensive capacity additions have created an extreme over-supply situation for global polystyrene. The first part of this decade until 2003 saw PS consumption in China increase by 640,000 tons, despite decreasing consumption in the rest of the world. Demand growth in China in 2004 and 2005 is expected to be drastically lower than previous years and is estimated to show an increase of 65,000 tons. Demand has been negatively impacted globally and particularly in China by high product and raw material prices that have led to product substitution and increased use of recycled or reprocessed material, especially in China. Change in consumer electronic technologies away from VCRs, CDs and CRT TVs are also depressing consumption growth. CMAI, however, has forecast that prices will ease, causing demand growth rates to improve. Estimated high propylene prices will make polypropylene less attractive as a competing resin. Benzene tightness has eased and therefore crude oil remains the primary driver of sustained high prices for PS. Demand will be even lower than CMAI's current forecast if crude oil prices remain at current high levels. Unlike many products, EPS demand is growing in almost every corner of the world. In North America and West Europe, though growth into the packaging sector has declined, growth into construction applications has made up. EPS demand in North America has been very strong in 2005 without corresponding increase in production, leading to an increase in imports from Asia. Asia has a cost advantage allowing EPS to compete. EPS demand in 2005 is expected to post slower growth due to significantly diminished demand from China's construction sector and a shift in EPS for packaging applications to paper. Asia, particularly China, has been adding EPS capacity at an incredible rate, hence the fear of overcapacity exists in China, as its own domestic demand has slowed.