North American prices for solid polystyrene resin shot up an average of 7 cents per pound in July, following a big increase in prices for benzene feedstock.
The increase comes after solid PS prices in the region had dropped a total of 6 cents per pound between April and June. Benzene prices for July were $5.28 per gallon — an 18 percent increase vs. the previous month. August may bring a continuation of the PS roller coaster ride, as benzene already has settled at $5.06 per gallon — down more than 4 percent vs. July.
Combined with price increases earlier in the year, regional solid PS prices now are up a net of 12 cents so far in 2014. Demand for the material, however, has not matched that net gain, falling 2.5 percent in the first half of the year, according to the American Chemistry Council in Washington.
In spite of that overall decrease, regional sales into the dominant food packaging/food service end market grew more than 1 percent in the first half. Sales into consumer and institutional — the second-largest end market for North American solid PS — didn't fare as well, falling more than 3 percent vs. the first half of 2013.
Market analyst Phil Karig said that PS makers “continue to be caught in a no-win situation.”
PS makers “haven't been able to get capacity utilization anywhere near the 90 percent-plus levels that typically characterize a seller's market in resins,” said Karig, managing director of the Mathelin Bay Associates LLC consulting firm in St. Louis. “But at the same time they are periodically forced to deal with high and volatile raw materials costs that lead them to push through substantial resin price increases.”
Those increases, he added, “often start eroding almost immediately as raw materials, particularly crude oil-driven benzene, start to slide again.”