Scarce demand and low prices for benzene feedstock sent North American selling prices for solid polystyrene, ABS and polycarbonate down even further in December and January.
Average per-pound PS prices slipped 12 cents in December and another 9 in January, according to buyers contacted recently by Plastics News. That brings the total PS price drop to 48 cents since Oct. 1 a plunge of just over 40 percent.
Regional ABS prices shed another 15 cents total in December and January, buyers said, bringing that market's total slide to 34 cents per pound since Oct. 1. Average PC prices ticked down another 10 cents total in December/January, giving the material an overall decline of 25 cents since Oct. 1.
For ABS, that's a 25 percent downward move in four months. The PC slide adds up to about 14 percent.
The PS swoon can be traced partly to U.S.-Canadian demand slumping almost 10 percent in the first 11 months of 2008, according to the American Chemistry Council in Arlington, Va. Sales into packaging and one-time uses like food service and food packaging fell almost 12 percent in the period.
The other major factor for PS is the impact that benzene has had on the value of styrene monomer feedstock. Benzene prices were just over $1 per gallon in both December and January, well off the $1.60 November price and light years away from the record $4.24 price of October.
However, recent spot prices of $1.35 in the benzene market are leading market analyst Greg Smith to believe the worst might be over for both PS and benzene.
``Costs are starting to move up, indicating we may be at a bottom,'' said Smith, with Resin Technology Inc. in Fort Worth, Texas.
``I wouldn't be surprised if the [PS] resin makers come out with price increase letters.''
Smith added that there's not much expectation of increased PS demand in early 2009, and that the North American PS market still may be oversupplied, in spite of removing more than 1 billion pounds of capacity in the past three years.
Most recently, Americas Styrenics LLC officials said Jan. 6 that the firm would remove 350 million pounds of PS capacity from its plant in Marietta, Ohio.
Those conditions were reflected in the 2008 results of Ineos Nova, a PS and styrene joint venture between Ineos Group of Lyndhurst, England, and Nova Chemicals Corp. of Pittsburgh.
The venture which ranks as North America's largest PS maker posted an operating loss of $206 million in 2008, as sales fell 7 percent to about $3.8 billion. The operation's sales volume in pounds for solid and expandable PS fell 8 percent during 2008, according to a Jan. 29 news release from Nova.
In the fourth quarter of 2008, ``rapid decline in energy prices and weakening economies of North America and Europe caused customers to curtail purchases to minimum requirements,'' Nova officials said.
Kevin McCarthy, an analyst at Bank of America Corp. in New York, said in an investment note that market conditions are preventing the Ineos Nova joint venture from realizing its true potential.
``At Ineos Nova, it appears that ample synergies of $80 million [annually] are being competed away in a difficult environment characterized by declining demand for polystyrene resin,'' McCarthy said.
Things also are not looking much better for ABS and PC demand in the early going of 2009, according to RTI's Smith. Traditional markets such as automotive and construction are a shadow of their former selves, while other markets such as electronics continue to limp along.
``Both [ABS and PC] are experiencing soft demand on a global basis,'' Smith said.
``They could be looking at capacity shutdowns if there's no immediate recovery.''