Mexico’s Polioles seeks EPS price increase for September

03 September 2013 23:14  [Source: ICIS news]

HOUSTON (ICIS)--Polioles, one of the two Mexican producers of expandable polysterene (EPS), on Tuesday announced to increase prices starting in mid-September, saying it had to make up for gains in values of feedstock styrene, according to market sources.

Prices will rise starting 16 September by 2 cents/lb ($44/tonne, €33/tonne), according to a company letter sent to customers and obtained by ICIS.

The higher price comes on top of a 3 cent/lb increase that the company announced in late July and which was implemented for some customers in August for what would be a total 5 cent/lb increase for the past two months.

“The reason for this increase is the continuous rise in prices of styrene prices, a key feedstock used in the production of expandable polystyrene. This price increase is necessary to reflect costs being incurred to produce our material,” the company letter said.

“Order quantities will be limited to typical historical volumes or as otherwise specified by written agreement,” the letter added.

The increase comes even as demand for block, or modified EPS, in Mexico has been slowing down as spending in construction in the country has fallen in recent months as a result of a decrease in housing related social spending by the government.

However, demand for package quality EPS has been growing at a 2-3% annual rate as most of that material is used by Mexican plants that export goods to the US. Those plants, known as maquiladoras, have seen sales growth similar to the US economy expansion rate.

Polioles also exports to markets in South and Central America, which have shown steady growth in recent months, sources said.

Sources from the buying side have said that the 3 cent/lb increase for August was not implemented for all buyers. Demand in Mexico is too weak to allow prices to rise too much, they said. All Mexican EPS production capacity is operating without any trouble, sources have said.

In addition to higher monomer prices, there is currently an “atypical” situation in Mexico because prices for EPS coming from Asia, once delivered, are more expensive than the material produced in North America, sources have said. The increase announced on Tuesday reflects a price that will remain competitive and below any Asian import once all delivery-related costs are included, sources said.

Polidesa, the other Mexican EPS producer, recently said it was considering price increases of about 2 cents/lb for September. However, a source close to the company was not available on Tuesday to confirm if any official announcement has been made.

Before any September proposed increases, Mexico prices as assessed by ICIS were 114.50-117.50/lb DEL (delivered) for block material and 110.50-113.50 cents/lb for package material.

Polioles is a joint venture of Alfa and BASF. Polidesa is owned by the Idesa Mexican group.

Besides Polidesa and Polioles, other major North American EPS producers are BASF, Nova Chemicals, Flint Hills Resources, Styrochem and Nexkemia.

The announcement comes after Nova proposed a 3 cent/lb increase in US EPS for both its regular and modified EPS starting in mid-September.

By: Renzo Pipoli
+1 713 525 2653

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