US, Mexico EPS prices to drop another 3 cents/lb in December

Focus article by Lane Kelley

HOUSTON (ICIS)–US expandable polystyrene (EPS) spot prices are set to drop another 3 cents/lb on 1 December because of slumping feedstocks, buyers and sellers said on Tuesday.

The decrease will mark the third consecutive monthly drop of 3 cents/lb for EPS and will likely will move the ICIS assessment next week down to 99-108 cents/lb DEL (delivered) for block material and 99-106 cents/lb DEL for package material.

US EPS prices took similar dips in October and November, with an additional  2-cent cut in November, all because of plunging prices in feedstocks benzene and styrene.

“This is a little bit of a broken record,” said one seller.

A buyer said, “I can’t complain, this is the third time in three months that there’s been that kind of drop.”

Some sources disputed the additional 2-cent/lb drop in November but confirmed actual spot prices. All sources cite the benzene decline as the prime mover behind price cuts in recent months.

Benzene has dropped from around $3.90/gal in late October to a low near $3.00/gal earlier this month, although it has rebounded since then to $3.33-3.40.

That dive, plus reductions in feedstocks styrene and ethylene, have traced the plunge in oil prices during the past 60 days.

Crude benchmark West Texas Intermediate (WTI) closed on 26 September at $93.54/bbl, and has dropped 20% since then, around $74.45 in trading on Tuesday.

A producer said that EPS demand remains strong and that December orders already are full because of the shortened month from this week’s Thanksgiving holiday. Another producer agreed, saying the latest price cut is all feedstock-related.

“Demand is stronger than it was last year at this point,” the producer said.

In Mexico, spot prices in December will be assessed by ICIS at 115-118 cents/lb DEL (delivered) for block material and 111-114 cents/lb DEL for package material.

A seller in Mexico attributed the drop to the benzene plunge “and to meet Asian competitive prices”.

Asian imports have been a competitive worry for domestic producers, especially in the western US. Most EPS sources now put Asian import prices below $1.00/lb, with the most popular range at 97-103 cents/lb.

Major North American EPS producers are BASF, Nova Chemicals, Flint Hills Resources, Styrochem and Nexkemia.