North American prices for polystyrene, suspension PVC and PET bottle resins all have tumbled since Aug. 1, reflecting declining demand and lower feedstock prices.
Regional PS prices plummeted 25 cents, following a major price drop for benzene feedstock, which is used to make styrene monomer. Contract benzene prices for August closed at $4.52 per gallon, a plunge of 33 percent vs. July. Major regional PS makers had taken the rare step of pre-announcing price decreases for August.
PS prices had surged an attention-grabbing 20-cents in July, matching another benzene swing. Even with the August PS drop, prices for the material are up a net of 32 cents since February.
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 near $3.84 on Aug. 31, sending benzene prices down as well.
In early August, Shayan Malayerizadeh, a market analyst with Petrochem Wire in Houston, told PN that 10-15 percent of U.S. Gulf Coast benzene production was out earlier in the year for various reasons. These supply issues were partly covered up by styrene outages in the first half of the year which reduced benzene demand.
When that styrene production came back online, it "soaked up the benzene inventory," he said, which led to a rapid increase of benzene spot prices and a "historic jump" in the benzene contract price in July. The market then took a quick turn in August, with octane values falling and styrene producers starting to reduce rates and selling their benzene inventory back.
PET bottle resin slumped 9 cents in August after sliding 12 cents in July. Prices for the material had jumped 13 cents in June. Even with the July and August drops, PET prices are up a net of 27 cents so far in 2022. According to market sources, the August PET price decline was the result of a large price decrease for paraxylene (PX) feedstock, combined with lower demand and higher inventories of PET.
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Strong seasonal demand for bottled water and other beverages had played a role in earlier PET price increases, as well as a lack of new capacity and freight and logistics challenges. Higher gasoline demand had lifted prices for PX, which also is used as a gasoline additive.
Although current bottled water demand is flat to slightly down, a March report from Beverage Marketing Corp. said that product became the largest U.S. beverage category ever in 2021, selling more than 15.3 billion gallons — the previous high recorded by carbonated soft drinks in 2004. The report added that "unprecedented" input cost increases "may put a damper" on beverage volume growth in 2022.
Regional PVC prices were down 5 cents in August, matching a similar drop seen in July. Prior to those moves, pricing had been flat for two months. Regional PVC prices now are down a net of 9 cents since Jan. 1.
Construction activity is a main driver of PVC consumption. U.S. housing starts in June came in at an annual rate of almost 1.69 million, up more than 1 percent vs. the same month in 2021, but down almost 1 vs. May. This trend is a potential indicator that PVC demand is leveling off.
Vinyl Institute President and CEO Ned Monroe recently told PN that he sees continued growth for U.S. PVC resin into 2023. VI is a Washington-based trade group that represents leading U.S. producers of PVC, vinyl chloride monomer and vinyl additives and modifiers.
"We manufacture the highest quality PVC globally and continue to produce it at a competitive price due to the abundance of U.S. natural gas," Monroe said. "In addition … the federal funding for improving our nation's water infrastructure over the next five years will require quality PVC pipes. We see PVC pipes playing a significant role in rebuilding our nation's water and wastewater lines."