The return of manufacturing to the US will result in some growth for certain PS applications, particularly in appliances
Volatile benzene pricing will continue to be the driver for US polystyrene (PS) and expandable polystyrene (EPS) pricing in 2014, with flat to only slight growth anticipated for both markets, sources said.
While prices fell steadily from those earlier highs, reaching a low point in July and August, they are beginning what has started to become an annual first-quarter climb.
A 9% increase in benzene contract prices in December 2013 is fuelling the latest price increases. PS producers are pushing for a 4 cent/lb increase for all grades in December, as well as an additional 3 cent/lb increase for January, while EPS producers are seeking a similar 4 cent/lb increase in January.
“Benzene is ridiculously priced,” said one producer. “We feel good when it goes down below $4/gal, but the reality is it is still a dollar more than gasoline.”
So far, the higher prices have not had a significant impact on demand in either market.
In the mature PS market, little to no growth each year has become typical, with producers now focusing on improving margins rather than increasing volumes.
In October, PS producers were successful in implementing a 4.5 cent/lb margin gain, when costs went down by 1.5 cents/lb and prices rose by 3 cents/lb. The focus for 2014 will be maintaining those margins, producers said. “This last quarter, we have gotten margins to a place where if we can maintain these, it is fairly sustainable for the business,” a producer said.
However, the key disposables sector faces the ongoing challenge of PS bans in cities and communities in the US, sources said. Most notably, New York City is considering a ban on food-service packaging made of PS.
In the EPS market, producers are also expecting minimal growth for 2014, saying that while certain applications, such as medical packaging and construction, continue to see gains, those gains are partially offset by losses for other applications, such as disposable food and drink applications.
“I think 2014 is going to be pretty similar to this year,” said one EPS producer.
Some buyers are more optimistic, saying that they expect to see more growth in 2014 as the economy improves. However, they are less optimistic about price.
“I have a feeling polystyrene is going to be expensive in 2014,” said one buyer.