Weak demand and soft raw material prices have led average North American selling prices for solid and expanded polystyrene to fall 5 cents per pound since Sept. 1.
The decrease follows increases of 16 cents per pound that hit the PS market since Jan. 1. U.S. and Canadian PS sales have been weak for most of the year, and were down almost 15 percent through August, according to the American Chemistry Council in Arlington, Va. The decline was equal in both domestic and export markets for PS.
Within those totals, EPS sales took an even bigger hit, slipping 21 percent. EPS accounted for about 15 percent of total EPS demand in the first eight months of the year, according to ACC.
The price decline also was prompted by sliding prices for benzene feedstock, which is used to make PS precursor styrene monomer. Per-gallon benzene prices were at $3.65 in August, but fell to $2.79 in September and $2.60 for October, market sources said, for a two-month drop of almost 30 percent. Those raw material swings had more of a direct impact on PS prices, especially since there was no demand strength to keep prices up.
But with recent benzene spot prices near $2.90, the rate of PS price declines already might be slowing down, sources said.
Slumping demand has placed North American PS operating rates in the 75-80 percent range, even with more than a billion pounds of regional capacity — roughly 20 percent of the market's peak — being removed in the last five years. At its current pace, 2009 will mark the fifth-consecutive year that U.S./Canadian PS demand declined.
On Oct. 22, Dow Chemical Co. reported that its global styrenics business — including PS — had “double-digit price and volume declines, driven by lower raw material costs and weak year-over-year demand in automotive, appliance and construction applications” during the third quarter of 2009. Dow's Americas Styrenics joint venture — a 50-50 partnership wit Chevron Phillips Chemical Co. LP — ranks as North America's second-largest PS maker with a sales market share estimated at 29 percent.
A longer-term bright spot could emerge in the shape of higher polypropylene prices, which could send some applications that had moved from PS to PP back to PS.
“Polystyrene may move to parity with polypropylene, and that's making the outlook for PS demand better than it has been in the past,” analyst Esteban Sagel said recently at a conference hosted by his firm, Chemical Market Associates Inc. of Houston.
Copyright 2009 Crain Communications Inc. All Rights Reserved.