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Raw material prices will set the tone for makers of unsaturated polyester in 1997, while production and sales of other thermoset resins are expected to mirror the economy.

After a disappointing 1996, a year that saw two failed attempts by UP resin producers to increase prices, manufacturers are expected to press for another hike in January. In December, ethylene glycol producers announced increases of up to 5 cents per pound. In addition, some UP executives expect styrene makers to take another shot at a price hike.

``Our margins have slipped dramatically,'' one UP executive said in a telephone interview. ``It leaves us with two options: Either you meet that price or you can go away.''

Production and sales and captive use of thermoset resins climbed 4 percent, according to year-end statistics from the Society of the Plastics Industry Committee on Resin Statistics. The 1996 year-end projections are based on nine-month data as compiled by Association Services Group LLC for the SPI committee.

Projected U.S. production, compared with 1995 results, shows:

Epoxy up 4.3 percent, from 632 million pounds to 659 million pounds. These figures include imports.

Polyester up 2 percent, from 1.58 billion pounds to 1.6 billion pounds.

Urea up 8 percent, from 1.8 billion pounds to 1.96 billion pounds.

Melamine down 0.3 percent, from 290 million pounds to 289 million pounds.

Phenolic up 3.1 percent, from 3.2 billion pounds to 3.3 billion pounds.

For 1996, Ashland Chemical's Composite Polymers Division reported relative success in the specialty resin areas, particularly vinyl esters in its corrosion-resistant product lines, and automotive and marine product lines.

The Dublin, Ohio-based firm's projections, however, are down for 1997.

"We are getting mixed signals from the tub/shower market since it is highly impacted by new use of composites,'' he said.

Reagan Stephens, business manager at Alpha/Owens Corning in Collierville, Tenn., said his company will study ``the raw material suppliers going through their annual ritual of a January [price] announcement.''

Ethylene and propylene glycols are key raw materials for UP manufacturers.

``We'll be waiting and watching to see if [a price increase] comes to fruition. If it does, it puts us in a tough position from a cost standpoint, because all are major components,'' he said.

Forecasts at Interplastic Corp. of Minneapolis project unsaturated polyester sales and production on the rebound in 1997, with sales growth at 3-5 percent, said Peter DiPietro, national sales manager. Sales and poundage were down in 1996; but sales should make a comeback, because demand is expected in the transportation industry and there are no economic worries on the horizon, he said.

Also, Interplastic will start a new, 50 million-pound reactor at its Silmar resins division in Fort Wright, Ky., in January.

The outlook at Reichhold Chemicals Inc. is for a short-term price adjustment, but long-term raw material supply should be ample, said Jim Maass, vice president of cast polymers. He said the transportation market should be steady in 1997, but the ``construction market is where our future is as long as interest rates and the economy stay healthy.'' The Research Triangle Park, N.C., firm saw ``modest success'' in 1996, with sales 2-3 percent higher.

Year-end 1996 projections of U.S. sales and captive use, compared with 1995 results, show:

Epoxy up 1.1 percent, from 620 million to 627 million pounds. These figures include imports.

Polyester up 2.4 percent, from 1.57 billion pounds to 1.61 billion pounds.

Urea up 7.8 percent, from 1.8 billion pounds to 1.95 billion pounds.

Melamine down 0.3 percent, from 286 million pounds to 285 million pounds.

Phenolic up 3.7 percent, from 3.2 billion pounds to 3.3 billion pounds.

Dow Plastics of Midland, Mich., projects 4 percent growth for the epoxy industry in 1997, along with stable prices, said Pedro Martinez-Fonts, marketing director responsible for epoxy resins, intermediates and polyurethane products.

The U.S. epoxy industry, which exports about 25 percent of production, should see its greatest growth potential in Latin America, where an emerging soft drink market uses the resin as coatings for aluminum cans, he said.

In phenolics, Occidental Chemical Corp.'s Durez Division and Sumitomo Bakelite Co. Ltd. plan to open a 50/50 venture in Fort Erie, Ontario, in mid-1997. The plant, announced in June, primarily will serve automotive component manufacturers. A second project slated for completion in mid-1997 involves expansion at the SumiDurez Singapore Pte. Ltd. plant in Singapore. The market for the expansion primarily will be the electronics industry.

Dick Maglisceau, OxyChem's director of marketing and new business development, said he expects growth to shift to the truck and sport utility markets, as well as the aerospace industry.