Focus story by Michelle Klump
HOUSTON (ICIS)--US polystyrene (PS) contract prices for August were assessed as flat on Friday, based on tightening supply which was counteracted by slightly lower feedstock benzene costs, and despite a mid-month price hike announced by one producer.
With the price rollover, US July PS prices were at 113-115 cents/lb for bulk general purpose PS (GPPS) DEL (delivered) and at 121-123 cents/lb for bulk high-impact PS (HIPS) DEL, as assessed by ICIS.
Contract benzene prices for August fell by 22 cents/gal to settle at $5.06/gal. However, supply during the month was somewhat tight, with one producer declaring force majeure on PS effective on 1 August.
While two producers did not announce any price increases for the month, the third producer, Americas Styrenics, announced a 5 cent/lb price hike effective on 15 August.
Sources have said they believe that announcement was related to a production outage at the company’s primary ethylene provider. With the ethylene shortage, Americas Styrenics had to buy spot ethylene, which was trading at a significant premium over ethylene contract prices during the month.
Buyers said they did not take an increase from Americas Styrenics, saying they placed their orders from the company during the first half of the month and were thus able to avoid the increase. While some buyers may have taken some of the increase in August, sources said they believe the full effectiveness of the increase will not be felt by the market until September.
“I would guess that they saw their sales going down in the second half of the month,” said one buyer. “Now the question is what is going to happen for September?”
So far, no new price increase announcements have been heard in the market.
September benzene contracts are expected to settle lower, following a recent decline in spot prices alongside improved supply conditions. Prompt benzene spot prices during the week were as much as 30 cents/gal lower than the August benzene contract price.
PS buyers said they would try to push for a price drop if prices fall much below $5/gal, adding that the market has not seen any relief as feedstock benzene prices have continued to fall from earlier peaks.
However, other sources said any price drop will depend on the supply situation.
“I hope the worst case is that it is flat with August, and the best is that the prices would start to go down,” said one buyer.
Major US PS producers include Total Petrochemicals, Styrolution and Americas Styrenics.