US polystyrene January contract prices rose by an average of 7 cents/lb

(ICIS) -- US polystyrene (PS) January contract prices rose by an average of 7 cents/lb (USD154/tonne, EUR120/tonne) based on higher feedstock benzene and butadiene (BD) costs, sources said on Thursday.

Producers had initially sought increases of between 5-6 cents/lb, but increased those nominations to 7-8 cents/lb, depending on the grade. The increases are based in large part on rising benzene prices, which settled up 70 cents/gal for the month of January to USD3.70/gal. While buyers were unhappy with the size of the increase, most saw no room for negotiation, sources said.

With the increase, US PS contract prices for January were at 84-87 cents/lb DEL (delivered) for bulk general purpose polystyrene (GPPS) and at 91-94 cents/lb DEL for bulk high impact polystyrene (HIPS), as assessed by ICIS.

Prices are expected to rise even higher in February, with at least two US producers announcing increases of 5 cents/lb for GPPS and 7 cents/lb for HIPS, effective 1 February, sources said.
Other producers are expected to follow with similar increases.

MRC

(Plastemart) -- Keyuan Petrochemicals, Inc., an independent manufacturer and supplier of various petrochemical products in China, has signed a cooperation agreement with Fangchenggang City to build a new production facility in Guangxi Province. The Company expects to commence construction in February 2012.
After conducting extensive preliminary studies for the past 12 months, the Company has decided to build a new petrochemicals production facility, Guangxi Keyuan New Materials Industrial Park, in Fangchenggang City. Keyuan chose this facility due to a combination of factors, including proximity to raw materials supplies, access to stable sources of power and skilled labor, and vast market potential.

Furthermore, it could improve the Company's competitive position by extending and expanding its supply chain and manufacturing base. Once the facility is fully operational, Guangxi Keyuan New Materials Industrial Park is expected to have annual production capacity of 400,000 metric tons of ABS (Acrylonitrile Butadiene Styrene).

MRC

(ICIS) -- Polimeri Europa has closed its European polyethylene (PE) order books for January as buyers flock to the market to get hold of more material ahead of an almost certain hefty price hike in February, a source at the Italian major producer said on Friday. ⌠We can't allow pre-buying in a market where prices will be up sharply next month. The current spread between naphtha and PE is absolutely unsustainable, said the source.

The market uncertainty of the fourth quarter of 2011, when spot PE prices were done at selected accounts well below the ethylene contract price, still holds for the long-term outlook, but there is now some clarity for the first two months of 2012. The January ethylene contract price rose by EUR40/tonne (USD51/tonne), leading to increases of around EUR50/tonne in the early January PE market. Expectations are now for a much bigger hike in the February ethylene contract, with PE producers expecting a three-digit increase next month.

They will inevitably attempt to recover this in their own PE market, as crude oil and naphtha prices have continued to exert heavy upward pressure on their own costs. Cutbacks in PE production across the board mean no surplus of material and attempts to pre-buy all grades of PE are now being thwarted by producers whose costs continue to rise and are expected to go up further in February.

MRC

(Arabian oil and gas) -- Global energy demand will continue to grow over the next twenty years, albeit at a slowing annual rate, fuelled by economic and population growth in non-OECD countries. Increased energy efficiency and strong growth for renewable energy are also forecast in BP's latest Energy Outlook 2030.

Global energy demand is likely to grow by 39 per cent by 2030, or 1.6 per cent annually, almost entirely in non-OECD countries; consumption in OECD countries is expected to rise by just 4 per cent in total over the period. Global energy will remain dominated by fossil fuels, which are forecast to account for 81 per cent of global energy demand by 2030, BP forecasts, down about 6 per cent from current levels. The period should also see increased fuel-switching, with more gas and renewables use at the expense of coal and oil.

That gradual switching should see renewables, including biofuels, continue to be the fastest growing sources of energy globally, rising at an annual clip of more than 8 per cent, much quicker even than natural gas, the fastest growing fossil fuel at about 2 per cent a year over the period to 2030.

MRC

(ICIS) -- European polyethylene (PE) and polypropylene (PP) buyers will face more upward price pressure in February if ethylene and propylene sellers realise the three-digit contract rise they are targeting for the month, market sources said on Thursday. ⌠I know the market doesn't like it, and there is nothing positive at the moment, but we have to look at the economics of polyolefins producers at the moment, said one large European polyolefins producer.⌠Everyone who produces based on naphtha is in deep trouble.

Cracker operators said current margins for them are unsustainable and a sizeable increase will be sought for the February ethylene contract, not only to recover margin lost since the January settlement but also to build in a buffer to protect against any further upswing.

The January ethylene contract settled at EUR1,120/tonne (USD1,436/tonne) FD (free delivered) NWE (northwest Europe), up by EUR40/tonne from December. The propylene contract was agreed up by EUR20/tonne at EUR1,105/tonne FD NWE.

Prices for both PE and PP have risen in January, but results of discussions have left prices well short of increases targeted by some producers.

Borealis had announced a EUR100/tonne hike, while Dow Chemical talked of plus EUR120/tonne. A third producer even spoke of a EUR140/tonne increase over December. January increases for PP monthly business have settled EUR40-50/tonne higher than December, however, while PE prices are up by EUR50-60/tonne.

MRC