Prices for plastic feedstock benzene continued to slide in November, taking prices for polystyrene, ABS and polycarbonate down along with it.
Prices for nylon 6 resin also have fallen since Sept. 1, according to buyers contacted recently.
Contract prices for benzene checked in at $1.07 per gallon in December, with spot deals being reported for less than $1. That's a 33 percent drop from the November contract of $1.60 and a plunge of almost 75 percent from the October contract of $4.24.
Benzene has fallen along with crude oil, where futures peaked at $147 in mid-July, but were around $42 in early trading Dec. 5 — a decline of 71 percent.
The impact on benzene-linked resins has been extreme. The November drop for PS in North America averaged 22 cents per pound, far exceeding the 5 cent drop seen in October. Prices now are down an average of 23 percent since Oct. 1, according to the PN resin pricing chart.
Several PS buyers expect prices to fall again in December, though by smaller, single-digit amounts.
``The benzene market may not have much more room to go down,'' said Greg Smith, a resin market analyst with Resin Technology Inc. in Fort Worth, Texas. ``Polystyrene demand has been poor all year and continues to be poor. The end of the year usually is a soft demand period for the material anyway.''
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.
ABS prices in North America took a 15 cent downward hit in November after sliding by 4 cents in October. On high-impact grades of injection molding ABS, prices now are down roughly 16 percent since Oct. 1.
RTI's Smith said the regional ABS market also is being affected by increasing availability of low-priced material from Asia, which has attracted North American buyers. Soft demand from the automotive sector also has eroded base demand for ABS in North America.
PC resin prices have been clipped by an average of 15 cents per pound since Oct. 1, buyers said. Much as with ABS, soft benzene economics and shrinking automotive demand led the PC decline. On general-purpose PC grades for injection molding, the drop works out to about 8 percent.
In spite of its recent swoon, Smith said he would not be surprised if benzene prices recover and cross the $2 per-gallon mark by mid-2009. That's partly because demand for toluene — a benzene feedstock and gasoline additive — increases during the summer driving season. Toluene sales into the gas market make less of it available for benzene production, tightening benzene supply and creating upward pricing pressure, Smith explained.
Average market prices for nylon 6 resin also have slid an average of 15 cents per pound since Sept. 1, mainly resulting from lower demand from the auto market. Makers of nylon 6/6 so far have prevented the decrease from affecting their material, buyers said.
Looking at the broader market for plastics and petrochemicals, consultant Balaji Singh said in a recent report that the market is the victim of bad timing, among other things.
``The petrochemical organizations knew the downturn was coming,'' Singh said. ``It's coincidental that the financial crisis is occurring when the chemical industry is already going through excess capacity, down cycle and global product migration.''
``The financial crisis was just a trigger for the explosive mixture that had been building for the last few years,'' said Singh, president of Chemical Market Resources, a Houston-based consulting firm.
In a Dec. 3 report, the American Chemistry Council said it expects total U.S. resin output to decline 4 percent in 2008 and almost 5 percent in 2009 before rebounding almost 2 percent in 2010.
