Amoco Chemical Co. has thrown a dark shadow over polypropylene markets by announcing a 2 cent-per-pound price increase effective July 1. Amoco of Alpharetta, Ga., the second-largest PP producer in North America, announced the increase May 22, causing some confusion in the market.
Most other PP producers previously announced 3 cent-per-pound increases effective June 1, except Phillips Sumika Polypropylene Co., which announced a 3 cent increase effective June 15.
Industry analysts and executives of other companies characterized Amoco's move as typical of that company's actions, explaining that Amoco has been known for taking a different path from other producers and for routinely announcing price increases after its competitors.
A majority of industry executives interviewed by telephone last week said they believe PP demand will remain strong and they expect to keep their increases at 3 cents. The executives spoke only on the condition that they not be identified.
Mark Eggleston, Amoco PP product manager, said May 23 he expects PP supply to remain tight at least for a year.
``Demand is still strong, but it is going to be hard to sustain the growth we have seen - at a 10-12 percent rate - for the long term. We have projected a base growth rate of 5-6 percent per year, so we expect demand will slacken from the rates we have seen,'' Eggleston said. ``We still see a tight market, with capacity utilization rates running above 90 percent.''
Eggleston said debottlenecking projects and capacity expansions now under way will be absorbed quickly by the market this year, but those expansions and others will help ease the market situation within a year.
In the meantime, Eggleston said Amoco sees justification only for a 2 cent increase.
The PP market now seems to be mimicking the polyethylene market, where a price increase has languished since early April. While PE producers insist that their increase ``is still on the table,'' one executive likened it to a horse lying injured on a road:
``It just needs someone to walk up to it with a gun and put it out of its misery, but no one's willing to step up to do it.''