STYRENE OPERATING RATES TO REACH 90 PERCENT BY 2014
After a steep decline to 24 million tons during the global economic crisis, consumption recovered strongly in 2010, reaching 26.4 million tons. Growth has continued at a slower pace over 2011, ensuring total demand remains above the pre-crisis peak seen in 2007. The growth outlook for styrene is relatively positive, partly due to the revival of polystyrene consumption growth in China. Styrene monomer is used in a broad range of polymer derivatives, ranging from commodity polymers to engineering plastics and synthetic rubber, namely polystyrene, expandable polystyrene (EPS), acrylonitrile butadiene styrene (ABS), styrene acrylonitrile (SAN), styrene butadiene rubber (SBR), styrene butadiene latex (SBL), and other copolymer resins.
The operators in the styrenics business continue to evolve through joint ventures and rationalisations. INEOS bought out NOVA from INEOS NOVA in February 2011 to form INEOS Styrenics, and subsequently merged with BASF’s styrenics business to form Styrolution in October 2011. Styrolution includes all styrenics assets except EPS and some ABS plants. In Japan, earlier consolidations that formed two joint ventures, PS Japan and Japan Polystyrene, proved insufficient, and all units are now likely to be closed.
Although polystyrene usage has declined globally since 2005, it remains the largest styrene consumer, and showed modest growth of 3.7 percent in 2010. Among the other derivatives, demand into EPS has grown at the highest rates, driven by protective packaging and construction sectors, and an increasing focus on energy conservation in buildings. EPS accounted for 13 percent of global styrene demand in 2000, rising to 20 percent in 2010, and will be a key future driver of styrene growth.
Styrene demand into ABS and SBR performed strongly over 2006-7, but suffered badly during the downturn over 2008-9 in Western regions. Asia led the recovery in these products over 2009. ABS and SBR grew strongly in 2010, with demand growth at over 10 percent for both polymers. Demand for both ABS and SBR in Asia is increasingly driven by local demand for finished products such as tyres, vehicles and electrical appliances.
Global Styrene Consumption, 2010
Capacity development continues to be concentrated in Asia Pacific and the Middle East. Asia Pacific has been the largest production base since 1997 following huge capacity development in China, South Korea and Taiwan. Saudi Arabia has been the focus of capacity development in the Middle East, although Iran and Kuwait have also recently been active. Capacity in North America has been declining since the 2007 peak, due to rationalisation in the United States. However, no further shutdowns are expected in the short-term. Styrene capacity in Western Europe also reached its peak in 2007, and further styrene capacity development in the region is unlikely.
New capacity developments will be based around advantaged feedstock in the Middle East and in China, where producers can benefit from both ethylene and benzene availability, and proximity to market. North America, Western Europe, Japan and South Korea are not expected to add capacity, while India is likely to start up its first styrene plant in a few years.
While global operating rates have increased steadily since 2009, rates are expected to climb significantly further by 2014, due to the limited quantity of new capacity under development. Operating rates will be high in the Middle East, due to the production cost advantage, while those in Western Europe are also high following large-scale consolidation. Asia Pacific, which will maintain a large structural styrene import requirement, will operate around global average rates due to large capacity additions, and the presence of several older and less advantaged units.
Trade flows of styrene are expected to increase as a result of export-oriented capacity development in the Middle East. North America’s net exports will gradually decrease, while Western Europe’s imports will remain stable. North American producers have substantially lost their market position in Asia Pacific as Middle Eastern exports increased. Demand for imports into Central Europe will increase, and exports from Eastern Europe will drop, as derivative expansions run ahead of styrene capacity development in both regions.
Report Availability
Nexant’s “Petrochemical Market Dynamics: Styrenics” report, published as part of its ChemSystems PPE program, provides an in-depth analysis and forecast of supply and demand in the global styrenics market. Subscriptions or single copies of the report are available from www.chemsystems.com
For details on how to access our detailed styrenics analysis please contact chemsystems@nexant.com
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