AKRON, OHIO (June 7, 3:30 p.m. ET) — North American prices for polystyrene and PET bottle resin continued to follow divergent paths in May, with PS edging slightly higher and PET sliding for the second straight month.
Regional PS prices ticked up an average of 1 cent per pound, according to buyers contacted recently by Plastics News. Some buyers of high-impact PS reported pricing was flat, but most indicated the 1-cent upward move.
Prices for both HIPS and general-purpose — or crystal — PS were flat in April, after HIPS prices had climbed an average of 2 cents in March. Counting the 1-cent May move, regional prices for both types of PS now are up more than 15 percent since Jan. 1.
The increases have not been supported by demand growth, as North American PS demand actually fell more than 2 percent in the first quarter of the year, according to the American Chemistry Council in Washington. Domestic demand fell only about 1 percent, with export sales posting the larger loss.
The May move may have found slight justification in prices of benzene feedstock, which moved up about 2 percent between April and May. Benzene prices for June, however, already are expected to be down about 2 percent, with some buyers anticipating a similar drop in regional PS tabs.
In a recent market update, benzene analyst Wilf Kimball said May's benzene price increase “wasn't warranted based on several factors.” The increase “could have been forced due to a large volume [of benzene] in the trading market that needed to be covered quickly,” added Kimball, who is with Houston-based Plaza Group.
Given a crude oil price of $105 per barrel, benzene prices should be around $4 per gallon, based on historic ratios, Kimball said. With that in mind, benzene's $4.11-per-gallon price for June would seem high, especially with oil prices around $85 per barrel in early trading June 7.
PET bottle resin's 2-cent drop comes a month after a 3-cent drop in April. Some buyers reported seeing the decreases as 2½ cents in each month. In all cases, the total two-month drop was 5 cents.
Regional PET demand “has been lower than expected all year,” one PET market contact said, citing a soft economy, high gasoline prices and low sales at convenience stores as reasons for weak PET demand.
He added that recent criticism of the sugar content of carbonated soft drinks has led more people to drink bottled water, which requires only one-third as much PET per bottle than soft drink bottles.
PET buyers said an expected June decrease in prices for PET feedstocks could lead to lower resin prices as well. Regional weather patterns also have played a role in PET this year, as warmer-than-normal March temperatures in much of the Midwest were followed by April temperatures that were cooler than normal, producing a negative impact on beverage sales.
Regional PET prices now are down 5 cents per pound, or about 5 percent, since Jan. 1, according to the Plastics News resin pricing chart.