Global Plastics Summit: No respite in sight for polystyrene

Chicago - If current estimates hold true, it doesn't look like polystyrene (PS) will have much of a comeback story anytime soon.

PS is estimated to have below GDP growth globally for the next five years.

"There's no shale gas benefit for benzene - no feedstock advantage," said Priya Ravindranath, principal analyst for IHS at the Global Plastics Summit. "There's no respite for polystyrene, at least in the near future."

The overall global demand for polystyrene has declined by 6% from the time period 2003-2013. While the demand for PS continues to see a steady decline, the prices, driven by benzene, is increasing.

The 2013 global PS demand was 10.5 million metric tones. About 37% of that global demand is consumed by packaging. Specifically, in the U.S. about 61% of PS is used for packaging.

But overall demand for PS in packaging has declined by 0.8%, with the majority of the decline in North America and Europe.

Ravindranath said that a key reason for the decline is the substitution of PS for other materials, such as PET and PP in packaging. With the higher prices of PS it can't compete with the lower costs of other materials. In fact, the NAM PS prices are at the highest level seen to date, driven by benzene.

But it's not just the high price that is moving people away from PS, it's also about perception. New York City Mayor Michael Bloomberg called for a citywide ban on polystyrene foam food packaging from stores and restaurants. In June, Bloomberg introduced legislation to prohibit polystyrene foam. There are currently more than 72 PS bans in California.

"There's a negative perception about PS in food packaging," she said. "Several cities have banned it. Many fast food chains are moving away from it."

Going forward, the packaging market will remain weak due to the threat from substitution and environmental pressures. In fact, PS is only estimated to grow at about 2%, which is attributed to the electronics and consumer segments market. 

"We're not overly optimistic - a 2% growth is not that significant," she said.