High feedstock prices have kept up pressure on markets for polypropylene and solid and expanded polystyrene, resulting in higher resin prices in recent weeks.
Prices for solid PS are up 4 cents per pound and for EPS are up 6 cents per pound since Jan. 1. Solid PS makers are working on additional 4 cent increases for Feb. 1 and have 3 cent increases on the table for March 1 as well.
``It's both rising demand and feedstock pressure,'' Nova Chemicals Corp.'s Rick Salvador said when asked about the January increase.
``There's inventory recovery from the end of the year and people are getting ready for their busy season.''
Salvador, who is vice president of Nova's styrenics business, said markets for styrene monomer could be tight well into 2004 because of numerous maintenance turnarounds now under way. That situation could keep pressure on PS prices. Although current PS operating rates are in the mid-80s, Salvador said styrene operating rates are ``well over 90'' percent.
U.S./Canadian PS sales were down almost 5 percent through November 2003, according to the American Plastics Council in Arlington, Va. That total includes a drop of almost 7 percent in U.S./Canadian sales of EPS.
Although sales into the dominant food-service end uses were up almost 3 percent, sales into food packaging were down almost 7 percent, while sales to resellers and compounders dropped more than 13 percent in that period. Losses in the latter two segments had taken more than 150 million pounds of PS out of the market.
Through October, food service accounted for more than one-third of all U.S./Canadian PS end uses.
Pittsburgh-based Nova suffered through another tough year in the styrenics market in 2003. Full-year results issued Jan. 28 showed that Nova's styrenics business - including PS and styrene monomer - posted an operating loss of $130 million in 2003. The business had lost $102 million in 2002.
The 2003 loss occurred even though Nova's styrenics sales were up almost 21 percent to $1.58 billion. The firm's solid PS and EPS sales volume remained flat at about 2.1 billion pounds.
In PP, producers rode a surge in pre-buying to raise prices 3 cents per pound in February. They had accomplished a similar goal in January, leaving prices up an average of 6 cents per pound since Jan. 1.
The increases took hold even though prices for feedstock natural gas are down about 50 cents per million Btu from their year-ago levels. That's a drop of about 9 percent - even though, at $5.30 per million Btu as of Feb. 12, natural gas prices remain more than double their 1990s average. The amount of natural gas in storage also is up about 17 percent from the year-ago period, according to the Energy Department.
``Resin capacity is down and natural gas is up,'' an Ohio-based PP buyer said. ``There's not a lot we can do.''
PP market leader Basell North America has delayed restarting capacity in Texas and Louisiana until sometime in 2005.
No other capacity additions are planned in the North American market, even though a modest sales increase of 3 percent in 2004 would create a need for almost 500 million pounds of additional resin.
PP makers next will work on increases of 5 cents per pound set for March 1.