PP MAKERS PUSHING FOR 3 CENT PRICE HIKE

Comments Email Print

Polypropylene makers have announced price increases of 3 cents per pound in an effort to boost sagging profit margins.

Phillips Sumika Polypropylene Co. of Houston announced several weeks ago it would increase its prices effective Feb. 1.

However, three PP makers — Fina Oil and Chemical Co. and Rexene Corp., both of Dallas, and Union Carbide Corp. of Danbury, Conn., said their increases will be effective Feb. 15. Others, including Amoco Chemical Co. of Alpharetta, Ga., Epsilon Products Co. of Marcus Hook, Pa., Huntsman Corp. of Chesapeake, Va., Quantum Chemical Co. of Cincinnati, and Aristech Chemical Corp. of Pittsburgh, said their increases will be effective March 1.

While several PP buyers said last week they are not expecting the increases to be effective, executives for PP producing firms said they believe demand is strong enough to support the increases.

PP makers have seen feedstock costs increase while prices for polymer softened in the last six months, as have polyethylene and polystyrene makers.

``Our margins have eroded since mid-1996, and demand is strong,'' Tom Wood, Huntsman vice president for PP, said last week.

Wood and other industry executives said PP inventories were low throughout 1996.

Producers attempt to maintain a 30- to 35-day inventory and it was only a slight slackening of demand in December that allowed inventories to climb to a 30-day supply.

``We're running flat out,'' another industry executive said.

However, processors expect new production at Epsilon Products and at Phillips Sumika to boost supply and throttle the price hike.

Further, four processors said last week they continue to see a large amount of PP being sold on secondary markets as near-prime or wide-spec materials, at 3-5 cents lower than prime resin. Those processors were in the Midwest, East, Southeast and California.