Chemical Profile: North America EPS

10 May 2013 09:39  [Source: ICB]


Expandable polystyrene (EPS) is a rigid cellular form of polystyrene with good thermal insulation, shock-absorbing properties, high compressive strength, low weight and resistance to moisture. The largest outlets are in building and construction sectors, where applications include foam, road construction, bridges, drainage, floatation and sound insulation.

EPSAnother major application is in packaging, particularly for food and delicate electronics. Other uses include providing protection in crash helmets and as decoration in design work.


After a year of uncertainty in 2012, filled with discussions about the potential sale of two North American EPS plants, 2013 began with continuation of the status quo. In August 2012 Flint Hills Resources announced it would not sell its plant in Peru, Illinois, which had been on the market since October 2011. In November 2012, NOVA Chemicals announced it was terminating its letter of intent for Canada-based PFB Corporation to acquire NOVA's performance styrenics business, which included its EPS business. For now, market participants say they expect all North American plants to continue operating as usual, with no major supply interruptions expected.

So far in 2013, demand for EPS has been fairly weak, with some producers saying sales volumes are down by more than 10% from 2012 levels, based on high prices caused by high feedstock costs. Another factor causing reduced demand in the first and second quarters has been an overly cold winter, which has caused the construction season to get off to a late start. In the first two months of the year, exports of EPS fell by 17%, while imports fell by 22%, as high feedstock costs in Asia have kept Asian imports from being competitive.

In the future, geofoam is expected to continue to be a big demand driver in the US, with some additional growth in the protective packaging sector.


North American EPS prices hit their highest point in five years in January, after feedstock benzene contracts hit a new record high of $5.16/gal for the month. Prices began to fall in March, dropping by around 7 cents/lb over the two-month period of March and April.

EPS prices are expected to hold steady or increase slightly in May, based on uncertain direction in the feedstock benzene market. Benzene spot prices have begun to creep up slightly following a 7% drop in April benzene contract prices. However, with only an 11 cent/gal increase in May benzene contract costs, some sources said they do not believe there is enough momentum for a price increase until June, or even later in the summer.

US spot prices were at 98-103 cents/lb for block material and 96-101 cents/lb for package material DEL (delivered), as assessed by ICIS. Mexico spot prices were at 113-116 cents/lb for block material and 109-112 cents/lb for package material DEL, as assessed by ICIS.


EPS is made in beads, which are produced in the suspension process by adding a blowing agent under pressure - usually pentane - which causes the resin to foam during moulding. It may be performed as a single or a two-step process.


In the mature North American market, demand for EPS is expected to grow by around 1.6% per year through 2015 and by 1.2% per year from 2015 through 2025. Growth rates for EPS typically follow US GDP.

EPSWith the construction market such a key downstream sector for the EPS market, participants will continue to pay attention to activity in both the public and private construction sectors. The most recent data from the Associated General Contractors of America indicates that construction spending rebounded in the first two months of 2013, with spending increases in residential, private non-residential and public investment. The rebound is expected to continue as the weather improves.

The industry faces ongoing challenges, including continuing efforts by certain cities and government entities to ban EPS foam for food packaging. New York City Mayor Michael Bloomberg in February brought what had been a fairly West Coast-centric proposal to the US's east coast when he proposed a city-wide ban on EPS foam food packaging. The American Chemistry Council and other EPS lobbying organisations are opposed to the proposed ban, but recently expressed support for expansion of plastics recycling in New York and elsewhere.

Another challenge comes from the US Environmental Protection Agency, which is pursuing risk assessments for flame retardants, including hexabromocyclododecane (HBCD), which is used to make modified EPS for the construction sector. There are alternatives to HBCD being developed, but some EPS sources said they are concerned there will not be enough of the new material to supply the market for modified EPS. Any shortfall in flame retardant supply is expected to cause prices for flame retardant grade EPS to rise in the near term.

By: Michelle Klump
+1 713 525 2653

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