Approximatley 40 percent of the styrene consumed worldwide in 2012 were processed into polystyrene. Polystyrene is used in the manufacturing of food packaging as well as electrical and electronic devices. The global economy will continue to recover during the next few years and thus provide the general framework for a moderate increase of demand for this type of plastic. Yet demand for polystyrene will not increase as dynamically as demand for other standard plastics due to a change in technologies and advancing substitution processes. Market researchers at Ceresana forecast global demand for styrene in the production of polystyrene to rise by, on average, 2.3 percent per year.
The second largest sales market is the production of expandable polystyrene (EPS), which is used as insulation material in new residential units and the refurbishment of old buildings, among others. Styrene based engineering plastics such as acrylonitrile-butadiene-styrene (ABS) are used by, e.g., the automotive and electronics industry, while styrene-butadiene rubber (SBR) is processed into tires. Styrene-butadiene latex (SBL) is utilized in carpets and paper coatings. Another application is the manufacturing of unsaturated polyester resins (UPR), which are processed into fiberglass suitable for automotive bodyworks and naval vessels due to its rigidity. According to the analyses of Ceresana, the production of ABS and EPS will provide the largest stimuli to growth in the future. Demand in these segments is projected to increase by 4.1% and 3.8% p.a. respectively until 2020. While the ABS industry is still in the initial stages in many emerging countries with excellent growth prospects, producers of EPS in several industrialized countries are able to profit from state-subsidies targeted at increasing energy efficiency. Even on saturated markets, this can provide growth impulses.
In the end, consumption of styrene depends on the demand of consumers for the different styrene based products. Thus, emerging countries exhibiting strong economic growth and a rising income offer a considerable potential. Conditions as propitious as these attract investment in the expansion of the downstream styrene industry. On the long term, this will lead to an establishing of an ever larger part of the value creation chain in these countries. As result, demand for styrene in some countries will rise significantly.
An example for a development of this kind was and is China. In the past eight years, demand for styrene in this country rose by 9.6% per year. Thus, China is the worldwide largest sales market, accounting for about 31.5 percent of market shares in 2012. The USA followed at a considerable distance, after demand for styrene fell by, on average, 1.9 percent p.a. since 2004.
Global production of styrene is increasingly relocating to emerging countries, while developed industrialized regions reduced capacities considerably in the last few years, especially Western Europe and the U.S. This shift was triggered by a previous excessive increase of production capacity at a time when demand for styrene rose at less dynamic rates or even declined in the aftermath of the global economic crisis. An effect of this process was the decline of global capacity utilization to 75 percent in 2009. While production capacities were relocated, degree of global capacity utilization rose again. This development is likely to continue; we forecast the highest relative increase of styrene production until 2020 to occur in South America and the Middle East. The production capacity in these countries with extensive crude oil resources will increase to approx. 4.8 million tons in 2020. Ceresana expects output in South America to increase by, on average, 13.4 percent p.a. during the next eight years.