Supply Deficit of Polystyrene
By Gao Chunyu

  1   Stable demand growth worldwide

The operating rate of polystyrene units has stayed around 80%
globally since 2000. Production capacity reached 19.36 million
t/a, output was 15.7 million tons, consumption was 15.53 million
tons and the operating rate was 81.1% in 2005.
    Asia is the largest polystyrene production and consumption
region in the world. The capacity to make polystyrene in Asia
was 8.89 million t/a in 2005 and the demand was 6.61 million tons,
accounting for 45.9% and 42.6% of the world total.
    In addition to China, Korea, Japan and Taiwan province are
major polystyrene production regions in Asia. Around 71% of
polystyrene imported by Chinese Mainland are from Taiwan
province, Hong Kong and Korea. The consumption of polystyrene
in China accounts for 57.6% of the total in Asia.
    In terms of the output by variety, the output of EPS
(expandable polystyrene) in the world was around 4.10 million
tons in 2005 and the output of GPPS (general purpose polystyrene)
/HIPS (high impact polystyrene) was around 11.60 million tons.
   In terms of worldwide consumption, EPS was mainly used in
construction and packaging sectors. GPPS/HIPS were still mainly
used in packaging and office equipment sectors. The consumption
of GPPS/HIPS in packaging and office equipment sectors accounted
for around 54% of the total and consumption in the
electronic/electric appliance sector only accounted for 10.9%.
In the Chinese market, approximately 50% of GPPS/HIPS were used
in the production of electronic/electric appliances.
    It is expected that the growth in production capacity and
consumption of polystyrene in the world will slow down in the
next 5 years. The capacity will reach around 22.01 million t/a
in 2010 and the demand will be 18.04 million tons. As the capacity
growth (2.6%) will be lower than the consumption growth (3.0%),
the operating rate of polystyrene units in the world will
increase further.


  2   Rapid output increase in China

The polystyrene resin industry in China developed rapidly during
2000-2005. Average annual growth reached 14.5%. Output
increased from 1.274 million tons in 2000 to 2.512 million tons
in 2005, and the self-sufficiency rate also increased from 46.6%
to 66.0%. The construction and expansion of polystyrene units
conducted by joint venture companies and private companies has
led to a rapid growth of polystyrene production capacity. The
growth of EPS capacity, in particular, is especially rapid in
recent years. The polystyrene capacity owned by joint venture
companies and private companies accounted for around 80% of the
national total in 2005.
    For long years, most of the polystyrene consumption in China
was satisfied by imports. Owing to the rapid output growth in
recent years, however, the imports have not increased much. The
net import amount only grew an average 0.6% annually during
2000-2004, and stayed at 1.5 million-1.6 million tons a year.
Because of the output growth and the reduction of demand growth,
the import amount was down to 1.421 million tons (141 thousand
tons for EPS and 1.28 million tons for GPPS/HIPS) in 2005, a drop
of 9.1% from 2004.
   There were nearly 20 EPS producers in China in 2005. They were
mainly joint venture companies or private companies. Five of
them had a capacity over 100 thousand t/a. The top three
producers in terms of capacity were Wuxi Xingda Foam Plastics
Materials Co., Ltd., Jiangyin Xinheqiao Chemical Industrial Co.,
Ltd. and Ningbo Xin-Qiao Chemical Industrial Co., Ltd. The
capacity of Taiwan-funded companies and private companies
accounted for more than 80% of the national total.
  There were nearly 20 GPPS/HIPS producers in China in 2005. Six
of them had a capacity of over 100 thousand t/a. The output was
1.177 million tons in 2005. The top three producers in terms of
capacity were Zhenjiang Chi Mei Chemical Co., Ltd., Shanghai
Secco Petrochemical Co., Ltd. and Shantou Ocean Enterprises
(Group) Co., Ltd.
  The growth of polystyrene consumption in China has slowed down
in recent years. In the television set sector, in particular,
due to the readjustment of product varieties the demand growth
of polystyrene has declined markedly. The demand for polystyrene
in China was 3.807 million tons in 2005 - an increase of 1.4%
over 2004 - and the growth was 0.9 percentage points below 2004.
Owing to the rapid output growth, the self-sufficiency rate
increased constantly and reached 66.0% in 2005. With the
completion of some polystyrene resin projects, the
self-sufficiency rate will increase further in the future.
    China consumed 1.203 million tons of EPS in 2005. EPS was
mainly used as buffer material in the packaging of household
electric appliances, precision instruments and other fragile
products. The consumption in this sector accounted for around
60% of the total in 2005. Another major application of EPS was
its use in construction heat-insulation materials, and the
consumption in this sector accounted for around 30% of the total.
The remaining 10% of EPS was used in other sectors.
  Consumption of GPPS/HIPS in China was 2.604 million tons in
2005. GPPS/HIPS were mainly used in the production of casings
for household electric and electronic appliances, sheets for
refrigerators and audio/video products. The consumption in this
sector accounted for around 48% of the total. GPPS/ HIPS were
also used in the production of daily use articles such as
household utensils, toothbrushes, cosmetic boxes, ornaments and
ink pens. The consumption in this sector accounted for around
34% of the total. 9% of GPPS/HIPS were used in packaging
materials such as trays for oral medicines, injections and foods.
The remaining 9% of GPPS/HIPS was used in other sectors.


  3   Demand growth slowdown

Due to the flat screen trend in television sets and displays,
the consumption of polystyrene per product is down and the demand
growth of polystyrene in the electronic/electric sector has
reduced markedly. In daily use article and packaging sectors,
despite the partial replacement by polypropylene, the demand of
polystyrene is still growing rapidly. The application of
polystyrene in construction and decoration sectors will also
develop rapidly. On the whole, the demand for polystyrene will
still be concentrated in the electronic/electric sector, but the
growth in this sector will be markedly reduced.

3.1 Electronic/electric sector

Owing to the progress in liquid crystal and plasma technologies
since 2002, the cost of planar television sets and displays has
dropped remarkably, and the output of plasma television sets and
liquid crystal television sets has increased to meet consumer
demands. The output of planar television sets in China already
accounted for 39% of the total in 2005. The technical progress
in the television set and display sector has had a great impact
on the demand of polystyrene. According to the survey, the
consumption of polystyrene is around 3.3kg per set of
traditional television sets. It is mainly used in back covers
of television sets. The consumption of polystyrene in planar
television sets is however only 0.9kg per set. As planar
television sets have larger screens, decoration in the