Prices for solid polystyrene and polycarbonate have drifted down after posting solid gains earlier in the year.
Solid PS, which slipped an average of 2 cents per pound in June, lost another 2 in July and August, according to several industry sources contacted recently.
``Our business has been soft for most of the year,'' said a PS buyer based in the Midwest. ``We might see more [price] erosion before the year's over.''
Sales totals from the American Plastics Council in Arlington, Va., back up the buyer's position. In the first half of 2003, U.S./Canadian sales of solid and expandable PS were down almost 8 percent, according to APC.
Sales to resellers and distributors dropped 24 percent, while sales into food packaging were down almost 9 percent. Those areas combined represented more than 20 percent of domestic PVC demand in the first half. Even sales into the normally robust expanded PS market suffered a first-half swoon of almost 11 percent.
The only major PS end market bucking the downward trend in the first half was food service, where sales grew almost 2 percent. Food service generated almost 35 percent of total first-half PS sales.
PS makers had pushed through an average of 10 cents per pound in increases before momentum shifted. Even with the decreases, average selling prices for injection molding grades of high-impact PS are almost 11 percent higher than they were at the start of the year, according to the Plastics News resin pricing chart.
Market leader Nova Chemicals Corp. of Pittsburgh undoubtedly is hoping that the PS picture stabilizes. The firm lost several days of production at a styrene monomer plant in Sarnia, Ontario, and an EPS plant in Painesville, Ohio, as a result of the Aug. 14 blackout that hit the northeastern United States and Canada. Nova estimates those outages, as well as outages at three other facilities, will reduce the firm's third-quarter earnings by about $10 million.
In PC, producers have given back about half of the increases they won in the first quarter. Prices had climbed an average of 10 percent - or 12 cents per pound for general-purpose and injection molding grades - in the first three months of the year. The decrease amounts to a drop of about 6 cents per pound for those materials, sources said.
Price spikes for PC feedstock benzene played a role in the first-quarter increase. Benzene prices climbed as high as $2 per pound, about 30 percent above where they were at the end of 2002, before receding to $1.25. They currently stand at around $1.50. A drop-off in injection molding demand and increased competition from foreign material have hurt the North American PC market in 2003, according to Ben Smith, an industry analyst with Chemical Market Associates Inc. in Houston.
``Export sales really dropped off in the second quarter and they didn't pick up in the third quarter,'' said Smith. ``There's also been a step change in import volume.''
As a result, Smith estimates that growth in North American PC demand will be flat or at most up 2 percent in 2003. He places North American PC operating rates at 70-75 percent after being around 80 percent last year.
On the foreign resin front, Smith expects offshore PC use in North America to hit the 140 million-pound mark in 2003. That would be a jump of almost 18 percent over the 2002 number, according to the Department of Commerce.