Raw material pressures have sent North American prices for PET bottle resin and solid polystyrene higher since Aug. 1.
PET prices are up an average of 3 cents per pound, largely due to higher prices of paraxylene feedstock. That, in turn, has lifted prices for purified terephthalic acid feedstock, which has its U.S. prices tied to paraxylene on a formula basis.
“Paraxylene keeps going up,” one industry insider said. “The margins on it are huge right now. And supplies [of paraxylene] are relatively tight.”
The raw material push has sent prices higher even as North American PET demand largely was flat in the first half of 2011. Demand for the material in Mexico was up slightly, but lower U.S. demand — caused mainly by continued lightweighting of PET bottles — negated that growth, the insider said.
Consumer preferences continue to move toward thinner water bottles and away from thicker bottles for carbonated soft drinks, he added. This was evident in a conversation he recently had with a U.S.-based bottler.
Every year, the bottler donates beverages to high school graduations in his region. Just a few years ago, the mix of donated beverages would be 90-10 in favor of carbonated soft drinks vs. bottled water. But that mix now has reversed itself, the insider said, with high schools requesting bottled water over soft drinks in the same ratio.
Full-year 2011 could be flat overall for North American PET demand, since no major product launches are scheduled for the beverage market for the remainder of the year. Regional PET prices now are up a net of almost 15 percent since Jan. 1, according to the Plastics News resin pricing chart, as three price increases have outstripped a pair of smaller price decreases.
In PS, prices jumped an average of 4 cents per pound, reflecting a 12 percent jump in prices for benzene feedstock, which settled at $4.13 per gallon for August.
The PS increase “really is cost recovery on the part of the producers,” said David Barry, a PS market watcher with PetroChem Wire consulting firm in West Orange, N.J. “Benzene was down in the $3 range, but now it's back up.”
Barry added that he wasn't sure of additional price increases, since spot prices for benzene already are trending down. On the PN chart, high-impact grades of PS for injection molding are up about 22 percent since Jan. 1 as a result of four price increases.
Through June, food-packaging and food-service applications led the way among PS end uses in the U.S. and Canada, with a market share of almost 60 percent, according to the American Chemistry Council in Washington.