European polystyrene drops to lowest value since 2021

European Polystyrene contracts dropped to their lowest value since February 2021 in October, amid easing feedstock costs. Polystyrene, a polymer of styrene monomer, is an essential plastic chemical used for food packaging, insulation panels in buildings, and for packaging goods.

Platts assessed the freely negotiated general purpose polystyrene net contract price at Eur1,540/mt FD Northwest Europe Oct. 30

European polystyrene contracts are linked to the styrene monomer contract price which is industry settled within Europe. Any change in the feedstock would be reflected in the polymer contract prices. In the past few years, due to the falling demand for virgin polymers and plastics, the increase or decrease seen within styrene contract price had not been fully absorbed by the polymer contract prices. To add to the troubles, despite producers running at around 60% production rate, the supply within the market remained more than sufficient to not have a positive impact on the prices.

Demand for polystyrene continued to remain subdued when compared to other polymers, with a 10% year on year decrease in demand for polymers, said a converter. However, this view was not shared by other participants, with another converter having seen healthy demand since 2023 for food packaging grade material. Polystyrene's image among consumers has been poor, with most looking at it as a non-recyclable commodity.

Since the start of 2024, styrene monomer industry settled contract price experienced consecutive triple digit price hikes in the first quarter of the year, Eur190/mt in February and Eur222/mt in March. This led to multiple targeted increase announcements by the producers which were not fully absorbed in the freely negotiated prices, amid a declining demand. GPPS FD Germany Net contract price reached a year high at Eur1,920/mt on May 1, 2024, with high impact PS maintaining a Eur100/mt premium over GPPS values.

Previously, GPPS FD Germany peaked at Eur2,690/mt on Jul. 27, 2022, according to S&P Global Commodity Insights data.

Due to PS being at a relatively higher price than other polymers, brand owners have been switching over to alternative polymers such as polypropylene and polyethylene terephthalate where feasible.

A PS producer said that the drop in prices would alleviate the pressure off the converters and end users who were looking at switching over to PP/PET for their packaging applications. However, this perspective was not shared by other participants, where one converter said the drop was only temporary and PS would rise again.

Despite the opposing views, the drop in prices was welcomed by market participants as it increased the competitiveness of European material against imports which despite being priced lower, suffer from delayed delivery times amid the attacks on merchant shipping in the Red Sea. Merchant vessels have been avoiding the Red Sea due to attacks by Houthi rebels since the start of the year, leading to ships sailing south of Africa. A European converter also said the Asian and Middle Eastern imports do not meet food grade requirements within Europe and are unusable for any food grade packaging.