Dynamics changing for Latin America PS market

Demand for crystal polystyrene is good, while high impact PS remains soft and some processors are switching to lower-priced resins. Latin America is bracing for more steep hikes after South Korea’s Hanjin Shipping filed for receivership last month, cutting into less expensive Asia supply. (VISUM/REX/Shutterstock)

Focus article by Marianela Toledo

HOUSTON (ICIS)–The Latin America polystyrene (PS) market’s dynamic related to crystal and high impact (HIPS) resins has changed recently, market participants said this month.

The demand for crystal – a resin used to process disposable plastic cutlery and dinnerware – was described as good, while the demand for HIPS still remains soft, market participants said. See the ICIS Pricing Report for more details.

“PS supply is tight [in September], but it’s even tighter for crystal resins,” a seller and importer from Mexico said.

According to the source, crystal demand usually increases at this time of the year because of seasonal reasons.

The high price of HIPS was said to be softening its demand, as processors that have the technology switched to other lower-priced resins such as acrylonitrile butadiene styrene (ABS).

HIPS is used mainly in injection moulded production. Commonly processed products include toys and appliances.

A seller and exporter in Brazil agreed that HIPS supply is still available, but crystal supply is tight.

Crystal exports have to be limited to focus on supplying the domestic market, the Brazilian seller said on Wednesday.

In addition, market demand has been slightly improving after Brazil President Dilma Rousseff was impeached, sources said.

Market dynamics also changed on the international market.

Latin America PS international prices are usually led by Asia price trends, mainly, because of the import volumes prompted by lower prices.

However, as shipping costs have risen over the past few months, imports from Asia have fallen, driving regional producers to take the lead on the pricing policy.

PS prices are also influenced by upstream costs such as from benzene, styrene and ethylene.

This graphic is an example of HIPS (Mexico domestic) prices compared with ABS (US domestic) prices. It shows the price gap between ABS and HIPS. HIPS prices are higher than ABS prices.

Concerns over shipping costs increased throughout Latin America after South Korea’s Hanjin Shipping filed for receivership.

Hanjin, one of the largest shipping companies in the world, was forced to file for bankruptcy protection after key creditors cut off support last month amid claims that a funding plan to deal with its debt burden was inadequate.

The move could lead to steep hikes in the cost of shipping rates to and from Asia.

And higher-than-ever shipping costs limit Asia’s PS shipments to the Latin America region even more.

As for September, resin producers Resirene (Mexico), American Styrenics (US), Total (US), INEOS (US) and Ajover (Colombia) separately proposed price increases of 3 cents/lb. Prices have been under pressure based on the benzene formula. In addition, supply has not been abundant.

At least in Mexico and Colombia PS prices settled higher at about 2-3 cents/lb ($66/tonne).

In Argentina domestic market, rebates for PS awarded during July and some extending through August were said to be cut off in September. For some this has meant a price increase.

Domestic prices in Brazil continued to roll over in September from August, sources said.

September prices increased by 2-3 cents/lb in Colombia, market participants said, on mostly steady demand.

In Venezuela, PS production was expected to restart soon with a cargo of feedstock arriving at the Grupo Phoenix plant Estizulia. The country’s sole PS plant had to shut down due to a lack of raw materials.

Import prices for PS increased in Peru and were steady in Chile.

Additional reporting by Tom Brown

INSET IMAGE: Polystyrene is used in producing plastic cutlery. (Food and Drink/REX/Shutterstock)