Polystyrene Prices in the U.K. Show Steady Decline Despite Economic Revival in July 2024

In July 2024, the price of Polystyrene in the United Kingdom ended at USD 1,810 per metric ton for general purpose grade on FD – Felixstowe basis on Friday, 26th. This price reflects a continued downward trend, despite signs of economic revival and improved business confidence.

Throughout July, the Polystyrene market saw significant fluctuations. Starting the month at USD 1,910 per metric ton, the price fell by 2.36% by mid-July, and by the end of the month, it had dropped an additional 0.55%. This cumulative decrease of over 5% highlights ongoing pressures in the Polystyrene market.

Several factors contributed to this decline in Polystyrene prices. The UK’s private sector showed signs of expansion, with increased activity in both services and manufacturing. Manufacturing output rose to its highest level in over two years, driven by stronger order book volumes. However, manufacturers faced significant challenges with rising input costs due to global freight issues and higher transport bills linked to the Red Sea crisis.

The imbalance between supply and demand dynamics has played a crucial role in this price trend of Polystyrene. Despite consistent production from major manufacturers and improved logistics ensuring a stable supply, high inventory levels have necessitated stock management efforts to align with reduced demand. This imbalance has been essential in driving price declines.

Demand for Polystyrene remains moderate, driven mainly by the packaging sector, which uses this commodity for its rigidity, transparency, and chemical resistance. However, the overall demand is tempered by lingering economic uncertainties and cautious spending in the manufacturing sector, reducing new orders and production volumes since June. Notably, the increased manufacturing output indicates strong efforts to reduce outstanding workloads and meet order demands.

Looking ahead, the market for Polystyrene is expected to experience varied trends. Elevated inventory levels might prompt suppliers to continue offering discounts to clear excess stock, and seasonal demand fluctuations could further pressure prices. However, post-summer logistics improvements may ease supply chain constraints, contributing to price stability.

Towards the year's end, increased industrial activity in preparation for year-end, coupled with favourable government policies and infrastructure projects, might stimulate market activity. Enhanced business confidence and rising demand from packaging and electronics sectors during the festive season could drive prices upward. Additionally, ongoing growth in key industries like packaging and electronics, coupled with tight supply of raw materials, might push Polystyrene prices higher.

Overall, while there are factors that could exert downward pressure on Polystyrene prices, potential improvements in market conditions and demand from key industries may lead to a more balanced market towards the end of the year. Market participants should remain vigilant and adaptable to the evolving economic and industrial landscape.