The European polystyrene (PS) market faced persistent downward pressure on prices in February, according to GC Intelligence market analysis.
This reflects the current state of the European economy with widespread low demand, even in the packaging industry.
The competition from imports is high, as Europe remains uncompetitive due to high energy prices for both polymers and finished goods.
Despite these challenges, a rebound in prices is possible. Should China’s economy recover, it could lead to a surge in global demand for gas and crude oil. This in turn will start to push costs up once again.
What is more, a recovery in China will mean a reduciton in competition for downstream products.
Meanwhile, the macroeconomic outlook has also improved due to lower gas prices and lower inflation. However, the possibility of a recession in Europe adds to the uncertain outlook.
To address oversupply amid low demand in recent months, producers heavily reduced operating rates.
Should demand gradually increases, suppliers will increase operating rates, which will prevent the market from becoming tight. However, a strong and faster demand rebound could lead to a tight market.
Overall, prices should remain rangebound due to ongoing market weakness and the expectation that gas prices will not return to their long-term trends.
And due to the current market weakness, prices should experience a milder recovery during the spring.