Unexpected price hikes for benzene feedstock have sent North American selling prices for polystyrene and ABS upward since Jan. 1.
The PS move totals 10 cents, split roughly between 7 in January and 3 in February, according to buyers and market watchers contacted recently by Plastics News. In ABS, a 2-cent January move was tripled into a 6-cent move for February.
Accusatory fingers again pointed to benzene, which is used to make styrene monomer. Benzene prices leapt from about $3 per gallon in December to $3.55 in January, with prices expected to stay within 10-15 cents of that level in February and March.
When looked at in that context, makers of PS and ABS are just trying to keep up with their own feedstock increases. But that's of little solace to the region's resin buyers.
The polystyrene [producers] had fallen behind on the margin curve, said Greg Smith, a market analyst with consulting firm Resin Technology Inc. in Fort Worth, Texas. Now they've tightened the market. They've reduced production and bled down inventory. That's making it tough on [PS] processors.
In the larger benzene market, prices are being controlled by traders, not consumers, according to Wilf Kimball, a vice president at Plaza Group, a distribution and consulting firm in Houston.
We've got low refinery operating rates and production is lower than usual, said Kimball, who has tracked the market for more than 20 years. You can argue that benzene is overpriced. If you do the math, it should only be selling for about $3.
After climbing an average of 15 cents or 22 percent for all of 2009, PS prices have raced out of the gate in 2010. The 10-cent move in the first two months of the year equals a 12 percent price increase on injection molding grades of high-impact PS, according to the Plastics News resin pricing chart.
In the first 10 months of 2009, U.S./Canadian PS sales were down almost 11 percent, according to the American Chemistry Council in Arlington, Va. 2009 marked the fifth consecutive year that regional PS sales declined. Sales for 2009 are expected to be around 5 billion pounds more than 25 percent below the almost 6.8 billion pounds of PS sold in 2004.
For ABS, the 8-cent hike in the first two months of the year reflected increased demand and feedstock pressure, Smith said.
Demand so far is ahead of where it was last year, he added. The agriculture and heavy-equipment markets are rebuilding inventory.
After climbing only about 7 percent in 2009, ABS prices now are up by an equal amount this year just since Jan. 1.
Sources estimate North American 2009 sales at less than 1 billion pounds.
Copyright 2010 Crain Communications Inc. All Rights Reserved.