Mexico EPS producer seeks 7 cent/lb August hike on benzene

16 July 2012 17:49  [Source: ICIS news]

HOUSTON (ICIS)--Mexican expandable polystyrene (EPS) producer Polioles on Monday announced a 7 cent/lb ($154/tonne, €126/tonne) price increase for all grades of EPS for 1 August, based on higher feedstock benzene prices.  

"The increase in the benzene market is impacting the cost of styrene monomer (SM), a key feedstock used in the production of expandable polystyrene," the company wrote in a 16 July letter, obtained by ICIS. "This price increase is necessary to reflect the costs being incurred to produce our material."

Other North American producers were expected to follow with their own price increase announcements, sources said.

US spot benzene prices were heard in the range of $5.20-5.35/gal by the end of 13 July, on average, nearly $1/gal higher than the $4.30/gal July contract settlement for benzene.  

The higher benzene prices have been attributed to heavy buying from traders with short supply positions, reduced production rates, light cracker feeds and global economic uncertainty. While some market participants were expecting prices to moderate after some of the short supply positions are covered, most sources said they do not expect prices to fall below $5/gal before September.

The price-increase proposal is expected to improve demand in the short-term, as buyers attempt to stockpile inventories ahead of the hike, sources said.

One producer said it plans to produce as little as possible in August to avoid the higher feedstock prices in the hope that prices will improve in September.

Current Mexican EPS spot prices are assessed at 110-114 cents/lb DEL (delivered) for block EPS material and 106-110 cents/lb DEL for package material.

($1 = €0.82)

By: Michelle Klump
+1 713 525 2653

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