Higher benzene supplies should provide some relief for polystyrene and styrene monomer markets, but the industry still could see more consolidation in the years ahead.
``Lots of new benzene will decrease global operating rates through 2010,'' Ineos Nova LLC's Steve Harrington said at the DeWitt World Petrochemical Conference, March 26-27 in Houston. ``Additional benzene capacity may help reduce price volatility, which is a challenge for styrene monomer producers.''
But Harrington, who serves as vice president of global styrene for Channahon, Ill.-based Ineos Nova, stopped short of saying that better benzene supplies could make PS more cost-effective, adding that PS prices are affected by a number of other factors as well.
Ineos Nova - formed in 2007 as a 50-50 joint venture between Ineos Group and Nova Chemicals Corp. - ranks as the largest maker of solid PS in North America and Europe. In North America, Ineos Nova makes 1.7 billion pounds of solid PS in Joliet, Ill.; Decatur, Ala.; and Springfield, Mass. European capacity totals 1.2 billion pounds from plants in Breda, Netherlands; Marl, Germany; Trelleborg, Sweden; and Wingles, France.
Ineos Nova also leads Europe in expanded PS production, with 850 million pounds in Breda, Marl, Wingles and Ribecourt, France. In North America, the firm is first among styrene makers with 3.7 billion pounds in Bayport and Texas City, Texas; and Sarnia, Ontario.
PS remains the largest end use for styrene, with a 40 percent market share, but global PS demand fell 0.2 percent per year between 2002 and 2007. High feedstock prices and soft demand have held PS back. In North America, PS demand fell over 5 percent in 2007.
``Styrene derivatives like polystyrene are leveraged into home construction,'' Harrington said. ``And U.S. housing starts were under a 1 million annual rate by the end of 2007.'' Rates had been above 2 million from late 2004 to early 2006.
Ineos Nova has reacted by closing four global plants since its formation. Sites in Belpre, Ohio; Montreal; Berre, France; and Carrington, England have closed their doors. The venture also improved its economics by buying the output of a styrene plant operated by Sterling Chemicals Inc. in Texas, and closing it.
The Ineos Nova venture - along with a planned joint venture by the PS units of Dow Chemical Co. and Chevron Phillips Chemical Co. LP - has left North America with only three major PS suppliers. Total Petrochemicals USA Inc. is the region's only stand-alone supplier.
``This is just the start of a lot of change we're going to see,'' he said. ``Operating rates are unacceptable and too many assets are uneconomical and small. The steps being taken are a self-help measure.
``If you're not a low-cost producer with good operating rates, you're in trouble in this business,'' he added. Closing plants ``is always painful to do, but we felt it was the right thing.''
North American PS prices climbed 15 percent in 2007, according to Plastics News' resin pricing chart, and are up 60 percent since early 2004. But Harrington contends that PS could get a boost from higher prices for polypropylene in some markets.
In cutlery, there could be substitution back from PP to PS, he said, because processors ``already have the tools on the shelf, so they wouldn't have to make a capital investment.''
Ineos Nova has annual sales of $4 billion and employs 1,400 at 11 plants in six countries.
