05 March 2013 19:54 [Source: ICIS news]
HOUSTON (ICIS)--US expandable polystyrene (EPS) spot prices dropped by 2 cents/lb ($44/tonne, €34/tonne) for March, based on lower prices for feedstock benzene, sources said on Tuesday.
March benzene contract prices dropped by 11 cents/gal to settle at $4.69/gal, following recent weakness in benzene spot prices and energy futures. The drop was the second consecutive monthly decline for the US benzene contract.
Buyers had been anticipating EPS prices to go down in February, based on a 7% drop in February benzene contracts. But with feedstock styrene prices holding steady and little competition from Asian EPS imports, producers were able to hold prices flat for that month.
Producers were expecting the price drop to help improve domestic demand in March, after a relatively weak February. However, one producer said it is so far not seeing sales volumes increase as much as had been anticipated.
"The thinking seems to be that the market is going to come down further in April," the producer said, in an effort to explain why demand is not as strong as expected.
One producer said volumes had improved slightly in the past several weeks, as buyers shifted some sales to domestic suppliers from Asian imports.
Asian prices are roughly on par with US prices, sources said. But with delivery taking more than six weeks, buyers said it is risky to buy Asian material, particularly when US prices could drop further.
"Prices are at parity now, which means there is no sense to import at all," said one buyer. "We are always a little scared to [buy from Asia] because things can change so rapidly."
US EPS prices were assessed by ICIS at 103-108 cents/lb DEL (delivered) for block material and 101-106 cents/lb for package material.
Major North American EPS producers are BASF, NOVA Chemicals, Flint Hills Resources, Styrochem, Nexkemia, Polioles and Polidesa.
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