Recent Economic Shifts Drive Price Changes in the US Polystyrene Market in May 2024

In light of recent changes in the economy and market trends, the US market for Polystyrene has shown steady pricing with a recent increase. As of May 24, 2024, the price for general-purpose Polystyrene (GPPS) grade in Houston was around USD 1,830 per metric ton. This rise follows a period of stability in the previous two weeks, showcasing the impact of demand changes and the overall economic landscape.

During May, the US Manufacturing PMI indicated strong growth in the manufacturing sector, reaching a two-month high in output mainly due to a surge in export orders, the highest seen in two years. In spite of this positive growth, new orders decreased for the second sequential month, implying cautious optimism among manufacturers, including those in the Polystyrene industry.

Increasing input costs have been a challenge for manufacturers, ascribed to higher prices for metals, chemicals, plastics, timber-based products, energy, and labour. This inflation in input costs, the most substantial increase in a year and a half, has been passed on to customers through higher selling prices, contributing to augmented inflation within the manufacturing sector, including the Polystyrene market.

In the first three weeks of May 2024, the Polystyrene market saw a decline followed by relative stability in prices, with GPPS grade trading consistently around USD 1,810 per metric ton. However, in the week of May 24th, prices began to rise due to more demand, tighter supply conditions, and increased freight charges, resulting in a price growth for Polystyrene.

The growth in Polystyrene prices was prompted by increased demand from key sectors like packaging and construction. Previously stable due to balanced supply and demand, Polystyrene prices rose in the fourth week of May due to heightened demand.

Though changes in the prices of the base material, Styrene, affected production costs for Polystyrene manufacturers, the overall cost pressures were somewhat manageable as the prices of upstream crude oil decreased further.

The manufacturing sector saw significant growth in overall employment due to increased orders and improved business prospects. However, inflation in input costs accelerated in both the manufacturing and service sectors, marking the second-highest increase in eight months, reflecting the broader inflationary pressures faced by manufacturers, including those in the Polystyrene sector.

The prospect for the Polystyrene market remains warily positive, with business confidence rebounding from a five-month low since April 2024, though still below long-term averages. Market sentiment is affected by doubts linked to inflation, interest rates, and geopolitical factors.

In summary, the US Polystyrene market is currently navigating a transition phase impacted by broader economic changes and specific industry dynamics. Recent price adjustments demonstrate the equilibrium between supply and demand, cost rises, and evolving economic conditions.