Polystyrene      

*Millions of pounds of polystyrene resins supplied as crystal, impact and expandable beads. Most capacity for solid crystal and impact resins is flexible.

Early in 2001, Nova Chemicals announced it would permanently close some of its older capacity. In February 2001, it shuttered its 230 million-pound plant in Joliet, Ill. Nova cited poor margins and the high cost of investment the plant would have required. In May, the company announced it would mothball four lines at its Belpre, Ohio, facility, also because of poor demand. The lines represent roughly 100 million pounds out of Belpre's nameplate of 485 million pounds. Nova says the lines will be brought back on stream once demand for solid polystyrene improves.

In 2001, Dow Chemical added 50 million pounds of capacity to its Hanging Rock facility, bringing the total capacity to 190 million pounds.

ATOFINA Petrochemicals is building a new 500-million-pound plant in Carville, La., scheduled to come on stream in mid-2002. The expansion will boost Carville's output to 1.625 billion pounds. The Carville site is also home to a 2.2 billion-pound styrene monomer plant that is a joint venture with GE Plastics and is operated by ATOFINA.

Chevron Corporation and Phillips Petroleum Company plan merged their chemical operations into a 50-50 joint venture in 2000. The new entity is called Chevron Phillips Chemical Co.

Elf Atochem merged with TotalFina, to form ATOFINA in 2000. Dart Polymers is a subsidiary of Dart Container Company. Kama is a subsidiary of IVEX Corp. StyroChem is a subsidiary of Radnor Holdings.

Profile last published 4/17/00; this revision, 3/18/02.

DEMAND
1999: 6,273 million pounds; 2000: 6,247 million pounds; 2004: 6,450 million pounds, projected. Demand includes imports (1999: 522 million pounds; 2000: 582 million pounds) less exports (1999: 678 million pounds; 2000: 671 million pounds).

GROWTH
Historical (1995 - 2000): 2.5% per year; future: 0.8% per year through 2004.

PRICE
Historical (1995 - 2000): High, $0.60 per pound, bulk cryst., hopper cars frt. alld.; low, $0.33 per pound, same basis. Current: bulk, cryst., hopper cars, frt. alld., $0.43 – 0.45 per pound; impact, same basis, $0.45 – 0.47 per pound; expandable beads, pkging grade, 1,000-lb. lots, same basis, $0.73 – 0.76 per pound.

USES
Packaging and one-time use, 50%; electrical and electronics, including CD jewel boxes and cassette reels and shells, 16%; construction, building products and furniture, 13%; consumer products, including recreational equipment and toys, 10%; medical products, 6%; miscellaneous, 5%.

STRENGTH
Despite the current weakness in demand, all US polystyrene producers have implemented a 3-cent increase for February 1 this year. Producers cite several reasons for the increase, including thinning margins and an expected increase in feedstock costs. In addition, Nova Chemicals has launched a 6-cent increase for expandable polystyrene, also for February 1.

Though there is a continuing effort to displace polystyrene in packaging materials and drinking cups with paper products, a renewable resource, packaging and one-time use grew to 50% of polystyrene demand in 2000; up from 48 percent just two years earlier. Fast growing segments of the packaging market included drinkware, fast-food containers, and trays and containers for delicatessen counters. Consumer product uses also increased share during this period, up from 9 percent to 10 percent in 2000.

WEAKNESS
In 2000 polystyrene consumption declined 0.4 percent and last year, another 4 percent, estimated. With pricing and margins falling to record lows, producers last year responded by throttling back production and, in some cases, even mothballing capacity. Operating rates are roughly 80 percent for polystyrene at this time.

OUTLOOK
Recent polystyrene price increases should offset the rise in styrene feedstock prices, which are anticipated this spring, thereby preventing further margin erosion and helping keep this segment economically healthy.

Producers, however, are expecting the industry to rebound in the second half of 2002. Besides the forecasted improvement in the general economy later this year, the currently depressed polystyrene prices should aid in stimulating demand as the economy improves. Growth between 2000 and 2004 is estimated to be only 0.8 percent, and is in part, a reflection of the negative growth experienced in 2001.