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November 17, 2008 01:00 AM

PS, ABS prices still slipping

Frank Esposito
Senior Staff Reporter
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    With prices for benzene feedstock dropping at a dizzying rate, prices for polystyrene and ABS each fell in October and are poised to do the same in November.

    Benzene — a key feedstock for styrene monomer used in both PS and ABS — saw its per-gallon price dive from $4.24 in October to $1.60 in November, an unheard-of drop of 62 percent.

    That dynamic allowed average per-pound selling prices for North American PS to decline by 5 cents and for ABS in the region to slip by 4 cents.

    The drop was fueled by the global plunge in crude oil — futures prices have fallen from $147 per barrel in mid-July to about $59 on Nov. 11 — and major declines in industrial demand. Supplies of toluene — a benzene feedstock — also have increased as gasoline consumption has lessened. That's because toluene often is used as a gasoline additive, according to Greg Smith, a market analyst with Resin Technology Inc., a consulting firm in Fort Worth, Texas.

    ``There's never been that much of a drop in benzene prices before,'' Smith said. ``But global demand is dropping and that's bringing prices for styrene monomer down as well. Price declines in November [for PS and ABS] could be even bigger.''

    But the quick slide might not be welcome at all processors, who might not have the product demand needed for them to take advantage of the lower prices.

    ``I don't think this kind of volatility is good for anyone because it's so difficult to manage,'' Smith said. ``But low prices aren't going to change demand for polystyrene. It will help, but not as much as some might expect.

    ``Fundamental demand is the key thing, but it's not there right now.''

    Through August, U.S./Canadian PS sales were down 4 percent vs. the year-ago period, according to the American Chemistry Council in Arlington, Va. PS sales into packaging and one-time uses were down 6 percent, while sales of expandable PS fell almost 7 percent during that period.

    Profitability also has been hard to come by for PS makers. Channahon, Ill.-based Ineos Nova LLC — the styrenics joint venture of Nova Chemicals Corp. and Ineos Group — posted a loss of $19 million in the first nine months of 2008, even as sales were flat at around $1.6 billion.

    In a news release, Ineos Nova officials said that third-quarter sales volumes were affected by Hurricane Ike, which caused temporary shutdowns at the joint venture's styrene monomer plants in Bayport and Texas City, Texas. Officials added that Ineos Nova cut production by 30 percent in September in order to reduce inventory.

    Based on estimated 2008 sales, Ineos Nova ranks as North America's largest PS maker with a market share of 35 percent.

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