New shipping rule adds to EPS import cost

Michelle Klump

28-Jan-2014

EPS import costsBy Michelle Klump

HOUSTON (ICIS)–Just as Asian expandable polystyrene (EPS) prices have started to become more competitive with US domestic prices, a new international shipping rule is adding to the cost to bring the material in, a buyer said on Tuesday.

Changes to the International Maritime Dangerous Goods Code, which went into effect on 1 January, now require EPS resin to be shipped in either a ventilated container, a container with one door removed or a container with an open top.

The change, implemented by the International Maritime Organization, is designed to address concerns about the flammability of pentane, the gas which is used as a blowing agent to cause EPS resin to foam.

However, sources said the new rule has resulted in an additional cost of around 2-3 cents/lb on top of standard ocean freight shipping costs.

“That is quite a bit,” said one buyer. “You are talking $1,500 a container.”

The new rule will not impact delivery of EPS from most North American suppliers to US buyers, as most domestic resin is shipped by either railcar or bulk truck. But buyers said it will definitely make imports more costly.

For much of 2013, high Asian styrene prices kept Asian EPS priced out of the US market. In recent weeks, as US styrene prices have increased and Asian styrene prices have fallen slightly, there have been opportunities for Asian material to make it to the US.

But the extra 2-3 cents/lb in shipping costs is keeping Asian EPS prices above $1/lb for delivery to most of the US, sources said, adding that at that price,  there is no competitive advantage over US material.

Sources said another challenge is that the ventilated and open-top containers are not as readily available as more traditional shipping containers.

“It could make imports more costly and more complicated,” said one market participant.

The new shipping rule will also affect domestic producers when they are exporting their resin to other countries.

“The cost to deliver has been increased,” said one North American producer. “This additional cost will be reflected in the selling price.”

However, because the new rule affects every country that ships via ocean freight, the producer said it is not concerned about losing market share.

“It will not affect our competitiveness as Asia EPS suppliers are also reflecting this additional cost in their new quotations,” the producer said.

Current US EPS prices are at 103-107 cents/lb for block and 101-105 cents/lb for package material, as assessed by ICIS.

 

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