US styrene and polystrene prices are anticipated to strengthen come January, a source said Tuesday, as feedstock spot benzene prices have been "robust" and feedstock ethylene prices have moved higher.
Sources expected styrene to breach the 60-cents/lb level in the beginning of 2012. Subsequently, producers have begun nominating increases for polystyrene in response to higher benzene, as well as ethylene costs.
"Benzene jumped so high so quickly," a producer said.
Styrene prices have not come up with benzene, cutting into margins, another source said.
Styrene prices have gradually increased since reaching a 2011 low October 5, when SM was assessed at either side of 54.30 cents/lb FOB USG and spot benzene was at 305 cents/lb FOB USG, according to Platts data.
Benzene has since increased 69 cents/gal from its 2011 low November 23 to an assessment Tuesday of 364 cents/gal FOB USG for January, while styrene has increased 4.05 cents/lb from November 21 to 59.80 cents/lb FOB USG Tuesday. Spot styrene generally increases 1 cent/lb per every 10-cents/gal increase of benzene, according to industry sources.
Meanwhile, spot ethylene has increased steadily by 10 cents/lb since reaching an 8-month low of 46.75 cents/lb on October 5 to an assessment Tuesday of 53.75 cents/lb.
The last deal for styrene was heard done last week for December at 59 cents/lb FOB USG, with January talked in the 60-62 cents/lb FOB USG range by market participants. Production was described as "normal" by producers.
Downstream, higher spot styrene costs, according to polystyrene producers, have prompted increases in price nominations for polystyrene within the last three weeks. Two producers were heard nominating January increases, with one producer nominating a 4-cent increase for general-purpose polystyrene (GPPS) and a 6-cent increase for high-impact polystyrene (HIPS), and another producer nominating a 6-cent increase for both GPPS and HIPS.
Prices for polystyrene reached a peak for 2011 of $1,755/mt FAS Houston for GPPS and $2,005/mt FAS Houston on August 10. GPPS and HIPS have since seen price decreases of $300/mt and $375/mt, respectively, to be assessed December 21 at $1,455/mt FAS Houston for GPPS and $1,630/mt FAS Houston for HIPS. Poor demand and competitive offers from Asia were named as reasons for the lower export prices, according to market sources.
