US, Mexico EPS spot heads towards fifth consecutive monthly drop

Focus article by Lane Kelley

HOUSTON (ICIS)–US expandable polystyrene (EPS) producers will drop prices by 9 cents/lb in February because of the continuing plunge in oil prices, buyers and sellers said on Tuesday.

It will be the fifth straight monthly spot decline in EPS, almost double the 5 cents/lb cut in early January.

“I believe this February reduction could be the last, and will be the floor for EPS prices,” a seller said in an email, adding that demand has been seasonably soft.

EPS spot prices will fall to 85-94 cents/lb ($1,874-2,072/tonne) on block from 94-103 cents/lb previously, and to 83-92 cents/lb on package, from 92-101 cents/lb.

Two producers – Flint Hills Resources and Nova Chemical – both said they would cut prices by 9 cents/lb, though some buyers said Flint Hills was giving bigger reductions to large customers.

US EPS producers have followed in lockstep with the drop in feedstock benzene, which dropped more than $1.00/gal since early December with plunging oil markets but has edged up in the past week, at $2.00-2.20/gal in mid-market trading today.

The drop in February should also put US prices closer to Asian imports, which have been generally priced around the low 80 cents/lb recently.

Buyers and sellers said that Asian styrene costs had jumped in the past week, above $900/tonne CFR (cost & freight) China.

A US distributor said the rise in Asian monomer had pushed up import prices to within 5 cents/lb or less of US domestic values and that parity between Asian and US EPS prices could happen soon.

“Once that happens, if the US is lower, then I’m going to have to pull out of the market,” the distributor said.

Sellers said that EPS spot prices in Mexico will follow the US drop in February, falling to 98-101 cents/lb on block, from 107-110 cents/lb previously, and to 95-98 cents/lb from 104-107 cents/lb earlier.

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