High raw material costs drive up US PS in June

08 May 2008 21:59  [Source: ICIS news]

HOUSTON (ICIS news)--Soaring raw material, energy and distribution costs have forced at least two US polystyrene (PS) producers to target 4-6 cent/lb price (€57-132/tonne) increases for June, buyers said on Thursday.

Crystal PS grades would increase by 4 cents/lb, and high impact polystyrene (HIPS) grades would increase by 6 cents/lb on 1 June, according to letters received by customers.

Sellers said they were already trying to lift spot PS prices, including off-grade material, by 1-2 cents/lb in May.

HIPS grades were targeted with a larger increase because a key component of those grades, polybutadiene rubber (PBD), has risen dramatically in cost, PS producers said.

In 2004, PBD was priced around 50 cents/lb, a producer said. Since then, it has more than doubled, to over 110 cents/lb. PBD is present in HIPS in a proportion of 1-15%, according to US patent filings.

“The recent spike in butadiene prices and shortages of PBD giving teeth to the increase,” a producer said of the 6 cents/lb increment for HIPS.

High crude oil costs also had the potential to drive up feedstock benzene values, a PS producer said.

US domestic PS prices have already increased by about 5 cents/lb this year on average, market sources said.

Despite the earlier increases, a PS producer said margins remained poor.

($1 = €0.65)

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By: David Barry
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