Soft demand can't keep North American polystyrene prices down.
Average selling prices for solid PS in the region have jumped an average of 6 cents per pound since June 1, according to buyers contacted recently by Plastics News. The increases largely are feedstock-related, tied in to surging prices for benzene, a chemical feestock used to make PS feedstock styrene monomer. Although some buyers reported seeing a 9 cent-per-pound increase, the average settled out at 6 cents.
The increase came even with first-half U.S./Canadian PS demand down about 2 percent, according to the American Plastics Council in Arlington, Va. PS sales into the electrical/electronics sector took the biggest hit, dropping almost 11 percent in the first half of 2006. Sales into consumer and institutional products eked out a 1 percent gain in the first half. Electrical/electronics accounted for about 7.5 percent of first-half U.S./Canadian PS demand, with consumer/institutional generating almost 8 percent.
``We're not really buying any more than we were last year,'' an Illinois-based PS buyer said. ``But our suppliers keep telling us they need the increases to keep up with raw materials.''
For a period of almost 20 years ending in 2003, North American benzene prices averaged just over $1 per gallon. But since the start of 2004, that average has climbed to almost $3, with contract prices for July checking in at just under $4.
Market leader Nova Chemicals Corp. of Pittsburgh has reacted to the situation by closing a 300 million-pound-capacity plant in Chesapeake, Va. Solid PS production in Chesapeake ended June 9, with styrenic compound production there expected to stop by the end of the year. The move is expected to tighten market supply and improve Nova's profitability.
Nova's solid PS and styrene monomer business - now operating as Styrenix - posted a loss of $84 million in the first half of 2006, even as sales rose 4 percent to just over $1 billion. The firm's solid PS sales volume in pounds fell 12 percent to 373 million.
A recent report from Chemical Market Associates Inc., a consulting firm in Houston, projects North American PS demand will grow at a 1.5 percent annual rate between 2005 and 2010.