A chaotic market for benzene feedstock sent North American polystyrene resin prices soaring in July but could be sending them down about the same amount in August.
PS prices moved up an average of 20 cents per pound in July, as benzene prices ballooned 42 percent to $6.82 per gallon. Benzene is used to make styrene monomer, which is then polymerized into PS.
PS prices had been up 9 cents in June and now are up a total of 52 cents since February. But a turnaround could be right around the corner, as contract benzene prices for August closed at $4.52 per gallon — a plunge of 33 percent vs. July.
Tight supplies and high prices for U.S. gasoline had driven benzene prices higher in recent months. Benzene is added to gas to increase its octane rating, which can improve engine performance. Average U.S. gas prices peaked at just over $5 per gallon in mid-June, but have since declined and were just under $4 on Aug. 10. That change has impacted benzene markets as well.
PS imports that had been slowed by shipping and logistics issues also now may be reaching the North American market, further increasing supplies and softening the pricing picture, market sources said. As a result, North American PS makers have taken the rare step of announcing price drops ranging from 15 cents to 25 cents per pound effective Aug. 1.
"The benzene market has been wild this year to say the least," said Shayan Malayerizadeh, a market analyst with Petrochem Wire in Houston. In an email, Malayerizadeh said there were several factors that led to higher prices for the material.
The U.S. Gulf Coast benzene market "is structurally short … we rely heavily on imports to balance out the market," he said. That dependency grew even more last year when Phillips 66 removed some capacity for the material, while imports between mid-2021 and mid-2022 were "well below historical average."