Polystyrene business: Thriving in challenging times

Polystyrene (PS) is a versatile material used to make a range of consumer products. It is often used in products that necessitate clarity such as food packaging and laboratory ware. In combination with numerous additives, colorants, and other plastics, PS is used to manufacture appliances, automobile parts, electronics, toys, equipment, etc.

Though still a large volume thermoplastic, PS has faced challenging times, especially over the last two decades, due mainly to shrinking demand for commodity grades. In response, the industry has undergone fundamental changes – significant consolidation, capacity rationalisation and the development of technologies that can recycle PS wastes.

The industry’s response presents important lessons for manufacturers of other polymers that could be faced with a similar situation due the global attention on reducing plastic consumption, and the desire to build a more circular economy.

Declining demand

Several factors have contributed to the decline in PS demand on a global basis: substitution by other polymers such as polypropylene (PP) and polyethylene terephthalate (PET); sustainability initiatives and legislation governing use of PS; negative consumer perception; and limited new markets & applications.

General-purpose polystyrene (GPPS) has a glass-like appearance and was once widely used to make the ‘jewel boxes’ used to package CDs and DVDs. The near elimination of these media to store music, videos, data etc. has shrunk demand for this use to negligible levels. The use of foamed polystyrene to package fast foods (clamshells for burgers, remember) and its ungainly presence in landfills led to a severe consumer backlash that tarnished all forms of PS.

Inter-polymer substitution

One of the important reasons for the decline in PS demand has been the in-roads made by other polymers into applications once the mainstay of PS. In food packaging, for instance, PP has made strong inroads, benefiting from the fact that it is much more recyclable (mechanical, chemical or energy). Today, yoghurt cups, to cite one example, are made nearly always from PP, not PS.

PS has also lost ground to PET. Both polymers are transparent and glass-like, but PET has the added advantage of being easy to recycle. India has one of the highest recycling rates for PET in the world, thanks to a large, but informal, collection system that enables reuse in less demanding applications such as polyester fibre-fill (though food contact applications of recycled PET remains a challenge).

It helps that both PP and PET are much cheaper than PS.

One growth area for PS is extruded PS, also known as XPS, widely used as insulation in housing and construction. XPS demand continues to grow despite the fact that there are alternate materials available, including glasswool and foamed polyurethane.

Continued contraction

Just how much PS markets have changed is evident from the numbers in Western Europe. PS demand in this market has fallen to 1.6-mt in 2018, from about 3-mt 20 years ago. The decline, of about 4.5% each year, shows no sign of stopping, let alone reversing, especially in the light of restrictions being imposed on single use plastics (SUPs). According to estimates by IHS Markit, a market research firm, PS markets in Western Europe are still contracting by about 3% each year.

Industry consolidation

The industry’s consolidation in Western Europe and North America began about ten years ago and has created a few new players. The four biggest are: INEOS Styrolution, Total, Trinseo and Americas Styrenics (AmSty); together they represent about 30% of global PS capacity. Their emergence has coincided with the closure of a number of plants, and represents one of the most fundamental reorganisations seen in the chemicals and polymers industry in recent times.

While Styrolution was founded in October 2011 as a 50:50 joint venture between INEOS and BASF, the German company sold out its stake to INEOS in July 2014. Trinseo’s precursor, Styron, was formed in August 2009 when Dow Chemical Company combined several of its businesses – styrenics; polycarbonate and compounds & blends; Dow Automotive plastics; emulsion polymers (paper and carpet latex); and synthetic rubber – as part of a larger process of identifying and selling non-strategic assets. Though owned by private equity for some time, it is now a publicly owned company. Trinseo has a 50% ownership in AmSty, with the other half held by Chevron Phillips Chemical Company.

The industry majors have shuttered capacity and tuned operating rates to maintain industry profitability. Operating rates in Western Europe, for example, are just around 65% – a level seldom seen in the commodity chemicals. Polyolefin producers, for example, seek to operate their plants at levels upward of 90% to maintain profitability. Another strategy adopted by some PS players is to convert their high impact PS (HIPS) plants to produce acrylonitrile-butadiene-styrene (ABS) resin – a commodity thermoplastic that still sees growing demand, especially from the automotive industry. Thanks to these portfolio shifts and outright closures, PS capacity in Western Europe is expected to drop by about 0.25-mtpa between 2018 and 2021.

In Asia, PS markets are still growing, though the pace has slowed. China is today the world’s biggest PS consumer and growth is expected to continue, driven by demand from the construction, electronics and appliances markets. While China has aggressively ramped up PS capacity over the last decade, leading to operating rates of the order of 60% in the industry, no new major projects are in the offing, which should lead to a recovery in operating rates going forward.

Recycling of PS

PS is unique because of its intrinsic circular capability. However, it is currently recycled at much lower rates than PET and polyethylene (PE). Expanded polystyrene (EPS), a widely used form of PS, produced to the extent of over 3-mt each year globally, with roughly 70% being single-use food and beverage packaging, is 95% air and expensive to ship to recycling centres. Often, it is contaminated with food.

While mechanical recycling of EPS is very challenging, there are a number of initiatives aiming to chemically recycle it.

Styrenics Circular Solutions, a joint industry initiative with four founding members (INEOS Styrolution, Total, Trinseo and Versalis), has identified two optimal technologies for converting used PS-based products back into high-quality virgin material: dissolution and depolymerisation. Both technologies operate on the molecular level, enabling separation of recyclable PS from the stabilizers, fillers, colorants and other additives. Depolymerisation thermally ‘unzips’ PS into its original molecular building blocks for re-use in high-quality food-grade products, while dissolution extracts impurities with a solvent, enabling re-use for many applications such as building and construction materials. In addition, EPS can be recycled by thermal methods, which basically involves combustion of EPS waste to generate energy.

These are still early days in efforts to recycle PS waste, including to monomer, opening the door to a more sustainable polymer usage. When that happens – and at scale – it will bring further pressure on an industry that is dealing with some fundamental and structural shifts.