CMAI Completes 2011 World Styrene Analysis

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Nov 10, 2010, 11:00 ET

HOUSTON, Nov. 10, 2010 /PRNewswire/ -- Chemical Market Associates, Inc. (CMAI) announces the completion of the 2011 World Styrene Analysis, an annual global study that covers historical trends and future projections for supply, demand, production, capacity, trade, pricing and profitability of the global styrene industry for the period 2005 to 2015. Included with each analysis is 12 months access to CMAI's online capacity and supply/demand databases with a mid-term supply/demand update, incorporating CMAI's latest market outlook. The analysis is a necessary resource for business managers and planning professionals who need to make strategic business decisions in a rapidly changing global economic and market environment.

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Current Market Situation

In 2010, after two years of contracting global demand, demand has resumed an upward trajectory and is now growing at the fastest pace since 2007. The likelihood is low that this level of demand growth will continue, since many markets are in rebound mode in 2010, and they will not grow by as much again next year. Most of the global styrene demand growth is currently from China therefore China's appetite for styrene will be the key to the recovery of the styrene market.

Polystyrene's share of total SM demand slipped back in 2010, while EPS and ABS demand are rising. At their forecast growth rates, EPS and ABS combined will overtake PS as a styrene end use by 2013, which is good news since they are growing much faster and will positively influence growth rates in the future. They have less price sensitive end uses than PS and will not be substituted as easily, should upstream cost pressures in the styrene chain escalate relative to competitive materials.

Market Outlook

Never before has there been more new styrene capacity added to the world market. The pro-rated growth in 2010 is almost 2.6 million metric tons. On the other hand, never before has there been so much capacity taken out of service – a little over 700,000 metric tons in 2010. In the past few years, the industry has responded to high levels of capacity additions by capacity shutdowns, rationalizing styrene capacity and shifting styrene production from the mature West to the emerging East.

Now, the rationalization in styrenics is finally approaching an end. Years of stagnating demand growth have caused a number of the leading companies in styrenics to focus on more profitable, faster growing businesses. Dow has sold its styrenics business, forming a new company called Styron. BASF has indicated that it will also sell or separate their styrenics business by January 1, 2011.

The market is starting with a six million metric ton capacity surplus (at 100 percent utilization) but the effects of the capacity rationalization and more effective management of excess supply are starting to be seen. Demand certainly needs to improve but with the worst of the recession behind us, growth across the board in terms of derivatives is expected in 2010-2015. Over exuberance in constructing new styrene capacity has ended and there is little in the way of new construction in the forecast period. The recession has momentarily swept away many of these construction plans. With operating rates forecasted to improve, styrene producers can finally see better times ahead.

To find out more about the current market issues and CMAI's outlook for this industry, order the 2011 World Styrene Analysis now at www.cmaiglobal.com. The analysis is available in book and CD-ROM format, with access to CMAI's Online Capacity and Supply/Demand databases. With updates to the Capacity database as changes in the marketplace occur, and a bi-annual update to the Supply/Demand database, clients benefit from up-to-date market information necessary for strategic business decisions.

CMAI is the premier provider of Market, Planning and Business Advisory services offering a unique combination of consulting analytics and expertise for the global chemical, plastics, fibers and chlor-alkali industries. With offices in Houston, New York, London, Dubai, Dusseldorf, Bangkok, Singapore and Shanghai, CMAI has provided expert business advisory services to a broad base of companies across multiple value chains and geographies since 1979. Clients to CMAI services include chemical and oil companies, technology & EPC companies, law firms, banking and financial institutions, plastic converters, textile & apparel manufacturers, brand-owners, grocers/retailers, government agencies and trading companies.

For more information on the 2011 World Styrene Analysis, visit CMAI's website at www.cmaiglobal.com or contact: