Heavy feedstock pressure has sent North American polystyrene prices up an average of 8 cents per pound since Dec. 1.
Regional prices for ultrahigh-molecular-weight polyethylene also are up an average of 15 percent since Jan. 1, and prices for thermoplastic polyurethane in the region are under pressure as well, according to buyers and market watchers contacted recently by Plastics News.
The PS move consisted of 2 cents in December and an average of 6 in January. The December move was a bit surprising, since benzene settled for that month at $3.28 per gallon a 4 percent drop vs. November. Resin supply tightness helped push the small increase through, market watchers said.
The bigger January PS increase was the result of a 56-cent leap in benzene pricing for January a 17 percent jump that pushed prices to $3.84 per gallon. Regional PS prices followed suit. The picture does not look much better for buyers in January, since benzene prices for February have settled at $4.35 per gallon a jump of more than 13 percent.
Global market trends are contributing to the benzene increases, according to Wilf Kimball, a market analyst with the Plaza Group consulting firm in Houston. In recent months, lower-priced benzene from Asia has been diverted to Europe, where Asian benzene makers can get better prices, Kimball wrote in a recent market update. As a result, supplies of benzene for North America have been constrained.
At Ineos Nova LLC the PS-making joint venture between Ineos Group and Nova Chemicals Corp. production of solid and expanded PS in the first nine months of 2010 roughly was flat with the same period in 2009. Through November, U.S./Canadian PS sales were up 1.5 percent, according to the American Chemistry Council in Washington. Domestic sales were flat, but sales into export markets were up almost 23 percent in that 11-month period, according to ACC.
Market watchers have said North American PS demand could benefit in 2011 if processors become frustrated with skyrocketing prices for polypropylene. The PP market has been in disarray because increased use of natural gas-based ethane has tightened supplies of propylene monomer. Ethane produces less propylene than crude oil-based naphtha does, but it's being used more heavily in North America because of lower natural gas prices.
PS market analyst Stacy Shelly of Resin Technology Inc. in Fort Worth, Texas, said there weren't a lot of exceptions to the December/January PS price increases. He added that some PS makers are trying to raise high-impact PS prices higher than general-purpose grades because of increases in price for butadiene feedstock.
In UHMW PE, North American prices have climbed since Jan. 1. It's the first increase for that specialty material since early 2010. The increase was announced at 17 percent, but is coming through at 15 percent for many accounts in North America, where Celanese Corp. ranks as the largest UHMW PE maker. That percentage equals an increase of about 10 cents per pound, according to the Plastics News resin pricing chart.
The cost of ethylene and energy has increased significantly since our last price review, an executive with one UHMW PE maker said. We absorbed it for several months, but we've reached levels that we can't absorb anymore.
The North American TPU field has seen a pair of price increase attempts issued by BASF Corp. since Jan. 1. That's drawn notice from buyers in the region, where prices rarely change more than once a year.
Officials with Florham Park, N.J.-based BASF could not be reached for comment. In a Jan. 25 price increase letter, officials with the firm said that the increase action is to ensure reliability of supply, support future levels of investment and help recover a small portion of raw material costs.
BASF's January increase attempt was for 3-4 percent. No amount was listed for the price increase in the letter, but buyers contacted by Plastics News said the February move could be substantially higher. Buyers added that they believe the price increase will be handled on a case-by-case basis.
One TPU market watcher said he was surprised by the back-to-back moves because of TPU's relative stability, especially when compared to commodity markets. He added that TPU demand has been on the upswing because of the comeback posted by the North American auto market, a major TPU consumer.
We don't usually see this kind of [pricing] thing in TPU, the market watcher said. And I think most [TPU makers] had a good year last year.
The North American TPU field is led by Lubrizol Corp., with a market share estimated at 50 percent. Industry sources said that BASF and Bayer MaterialScience LLC are generally considered to be roughly equal in second place, with Huntsman Corp. holding down the No. 3 spot. Those four firms account for roughly 90 percent of the regional TPU market.