03 January 2012 19:55 [Source: ICIS news]
HOUSTON (ICIS)--Expandable polystyrene (EPS) producer BASF is seeking an 8 cent/lb ($176/tonne, €136/tonne) increase for US modified EPS by mid-month, as part of a strategy to create a 4 cent/lb differential between modified and non-modified EPS, according to a customer letter obtained on Tuesday.
The company is seeking a 4 cent/lb price hike for non-modified EPS along with the 8 cent/lb increase for modified EPS, effective on 16 January, according to the letter.
The nomination is slightly higher than price-increase nominations from other North American producers, including NOVA Chemicals and Flint Hills Resources, which are both seeking 4 cents/lb for non-modified and 6 cents/lb for modified EPS.
However, the proposal is in line with the BASF's Mexican joint venture Polioles, which is also seeking to create a 4 cent/lb differential between modified and non-modified EPS. Mexican conglomerate Grupo Alfa is the other partner in Polioles.
The increase for non-modified EPS is related to higher prices for feedstock benzene. The increase for modified EPS is based on higher costs for the flame retardant hexabromocyclododecane (HBCD).
Some buyers said they understand that costs for the flame retardant are going up, and they expect at least a 2 cent/lb differential to be accepted.
While the flame-retardant additive is required for EPS used for construction, it is not required for all EPS used for packaging. Sources predicted that the price differential will cause some packaging consumers to switch to non-modified EPS.
($1 = €0.77)
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