Steadier US PS market seen on joint ventures

12 April 2007 20:28  [Source: ICIS news]

HOUSTON (ICIS news)--The planned Dow Chemical-Chevron Phillips and NOVA-INEOS joint ventures should improve market stability in the US polystyrene (PS) industry, market sources said on Thursday.

PS suppliers said they expected the recently announced joint ventures to lead to a steadier environment conducive to improving eroded margins and counteracting the negative impact of volatility in feedstocks costs.

Although plagued by unpredictability in the past several years, PS activity in 2006 became more rational.

The market, prodded by the closing of Dow’s two PS production units in Sarnia, Canada, and the NOVA STYRENIX restructuring, became more disciplined and avoided earlier opportunistic buy-sell cycles, participants said.

However, buyers cautioned that a reduction in the number of PS suppliers could prompt further price increases, reducing demand for a product that was already considered too expensive when compared with alternatives such as paper and polypropylene (PP).

Consumers said the PS market is not booming, and that the threat of imports of PS either as raw material or as finished goods should be of concern to the US industry.

While PS producers said that logistics do not favour importing PS from Asia, buyers said imports requiring additional handling of PS in supersacks is feasible, and that the key consideration is cost.

US PS domestic shipments are in bulk railcars which are directly unloaded at the plant. Asian exports are in large sacks (supersacks) in containers, which require additional handling once they arrive in the plant. US benchmark domestic bulk prices for PS stand at 86-94 cents/lb, according to global chemical market intelligence service ICIS pricing.

By: Ron Coifman
+1 713 525 2653

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