Higher benzene costs have sent per-pound selling prices for polycarbonate and expanded polystyrene up in recent months, while elevated butadiene costs have done the same in the ABS market.
Prices for benzene - a chemical feedstock used in production of both PC and EPS - currently stand at around $2.30 per gallon. Prior to December, the material's historic high had been around $1.60 per gallon, according to Ben Smith, a market analyst with the Chemical Market Associates Inc. consulting firm in Houston.
``Benzene pricing has caused a lot of panic and fear among [PC] producers,'' Smith said. ``They're not trying to build margin [by raising prices], they're trying to keep margin.''
First-quarter North American PC demand also was up more than 5 percent, according to industry sources. As a result, PC makers were able to lift prices an average of 3 cents per-pound. This increase is shown on this week's Plastics News resin pricing chart.
The increase also marks only the third time PC makers have been able to pass on marketwide price hikes since 2001.
Increased global supply has cooled PC prices while demand has slipped from the double-digit growth rates the material enjoyed throughout much of the 1990s. This supply-demand shift especially hit optical media grades used in compact discs and DVDs.
PC profit margins ``are now at an all-time low than cannot be maintained,'' according to Sander van Veen, global PC director for Dow Chemical Co. of Midland, Mich.
EPS up 3 cents
The benzene factor also enabled EPS makers to lift prices another 3 cents per pound since February, according to several buyers contacted.
``With benzene this high, [EPS] producers really have no choice but to raise prices,'' an EPS buyer in the Southwest said.
The 3 cent hike leaves EPS prices up an average of 9 cents per pound - a markup of about 10 percent - vs. their January levels.
Those upticks also have occurred even though U.S./Canadian EPS demand was down more than 1 percent in the first two months of the year when compared with the same period in 2003, according to the American Plastics Council in Arlington, Va.
In ABS, higher prices for its butadiene component, along with the effect of high-priced benzene on styrene monomer prices, have bumped prices up an average of 3 cents since March. Another 3 cent price hike also is on the table.
``Raw material and energy costs to manufacture styrenic copolymers, as well as costs to transport these resins to our customers, have gone up substantially in the last 18 months, with a significant spike over the past four months,'' said Herman Savenije, North American styrenic copolymer director for BASF Corp. of Mount Olive, N.J.
``We foresee no short-term relief from these conditions,'' Savenije added.
Butadiene costs almost have doubled in the past 18-24 months as well, according to Brett Simpson, Dow's global copolymer director.
As with EPS, the recent run-up in ABS prices runs counter to sales trends. North American ABS sales were down 4 percent in January and February vs. the year-ago period, according to APC.
The ABS increase marks only the second time producers have won marketwide price hikes since mid-2000.
