Buyers are reluctant to accept increases amid steady costs.
Polystyrene (PS) prices in Europe look set to roll over in August according to market feedback. While it is early in the month, a consensus is building across market participants that sellers could struggle to achieve increases. Some increases will go through, but probably not on most accounts.
What is more, styrene prices seem to have lost momentum. After little movement between July and August, it is possible that prices will remain steady in September. A slight decrease is also possible. Therefore, buyers are unlikely to start to fill stocks ahead of September.
But demand for polystyrene has been holding up well on most of its key market segments. Packaging demand has gone up since the start of the pandemic as more people are staying at home. The rate of growth has recently slowed down as countries have eased restrictive measures, but demand remains strong in this sector. Demand for white goods in August was apparently strong, attributed to pent up demand and possibly to changes in household consumption patterns. And demand for single use applications also increased as it adds another layer of protection against the spread of the virus.
Producers seem to have managed well operating rates as the market is very much balanced. Some turnarounds have finished, and others are expected to begin in September. This is keeping the market balanced. And due to the surprise good demand in August, some sellers said they are already sold out.
Demand tends to slow down during the summer, especially in south Europe, in countries such as Italy and Spain. The first two weeks of August, demand in such countries can fall as much as 20-30%. However, more than one seller noted that this has not happened this year. Demand has remained relatively strong in August.
As mentioned, prices could remain steady until September. The next few months remain uncertain regarding the overall economic performance and the risk of another setback. However, given that PS has not suffered as much as many other polymers, it is unlikely that demand will collapse, even if there is a second wave of infections. A steady but shallow price recovery is the most likely scenario for the next ten months.