Expanded polystyrene prices continue to race upward, with producers successfully passing through another 6 cents per pound in price increases since early May. EPS prices now have climbed an average of 28 cents per pound since mid-1999. In unmodified grades, this translates into a jump of roughly 50 percent.
Producers and processors pointed to rising styrene monomer costs and heavy demand. EPS prices had dropped about 25 percent between 1996 and 1998, resulting from excess capacity.
Through March, U.S. EPS sales were up more than 15 percent over 1999, according to the American Plastics Council in Arlington, Va. EPS sales into block and shape applications were exceptionally high, climbing 26 percent and 33 percent, respectively, through March.
Tightness in styrene monomer supply also led producers to conserve monomer for standard PS production rather than allocating it for EPS use, according to several sources. This practice, combined with a lack of new EPS capacity, has further tightened the market.
"[EPS makers] couldn't get styrene to make EPS even if they had capacity," an EPS processor based in the southwest United States said.
U.S. EPS processors also have fewer options to turn to in a market dominated by Nova Chemicals Corp., Huntsman Corp. and BASF
Corp. Each of the players has more clout in a rapidly growing market.
Several industry sources said BASF had added capacity recently in Jamesburg, N.J., but BASF officials could not be reached to confirm this report.
EPS makers will try to keep the pricing momentum going with increase attempts of between 5 and 8 cents per pound effective June 1.
Eric Kelusky, vice president of Nova's EPS and high-performance styrenics businesses, said 2000 growth has been tied into markets for insulation — including foundation molds used in construction — and packaging for televisions, computers and other consumer electronic items. Improving demand from Asia also has impacted the market in recent months, he added.
Kelusky pointed out that PS and EPS makers still are operating below profitability levels, even though margins are improving in styrene monomer.
Nova expects EPS growth eventually to level off to about 6 percent for the year, but tight supply conditions should continue through 2002 in the absence of any new capacity.