Polyethylene producers have taken a 90-day-old, pending price increase off the table. Separately, momentum for pending increases in polystyrene and polypropylene may be waning, according to industry sources.
As if confirming Alan Greenspan's June 20 statement that slower economic growth fostered by the Federal Reserve Bank's economic policies have checked price increases, PE producers said last week they have walked away from their price increase. Greenspan is chairman of the Fed.
Phillips 66 Co., based in Bartlesville, Okla., led the industry in rescinding the increase, which was announced in mid-March and initially was to have taken effect April 15.
However, producers rolled it back several times as they saw demand sagging. The increase was for varying amounts for different grades of PE. In its latest iteration, it was to have become effective July 1.
Don Brady, Phillips' worldwide PE man-ager, said the rollbacks caused confusion in PE markets.
``We have to clear the air and get back to a level playing field, so everyone knows where we stand,'' Brady said in a telephone interview June 21 from his office in Houston.
Other PE producers quickly followed Phillips's lead, quietly rescinding their announcements.
The pending increase was in trouble from the outset, coinciding with declining PE demand. That slowdown now appears to be part of a general economic slump brought about by higher short-term interest rates.
At first, producers thought the drop in demand was based on full inventory levels at processors' plants. Those thoughts were bolstered when orders increased slightly in late April.
Demand fell again in May, reflecting the general slowdown in the economy that Greenspan spoke of June 20 in a speech to the Economic Club of New York.
The economic slowdown and slackened PE demand in turn contributed to increased inventories for ethylene monomer. Ethylene shortages contributed to price increases and nervousness in the market through the second half of 1994.
While ethylene suppliers were expecting to build inventories back to normal levels by December, executives are saying now that they expect inventories to reach a normal 12- to 14-day level by the end of June or in early July at latest.
Meanwhile, PS and PP producers have seen similar declines in demand, and their pending price increases also appear to be flagging.
A PS increase of 4 cents per pound scheduled for June 1 has been cut to 2 cents per pound. The announced increase was the second 4 cent increase PS producers sought this year. Previously, they put two 2 cent increases into effect after announcing they would seek a 4 cent hike.
The move to halve the latest increase came on the heels of an announcement from Fina Oil and Chemical Co. of Dallas that it intended to postpone indefinitely half of its pending increase. Other PS makers quickly followed Fina's lead.
Separately, Amoco Chemical Co. of Alpharetta, Ga., dimmed the chances for a 3 cent-per-pound price increase that other PP makers announced for June, when it announced a 2 cent increase effective July 1.
Amoco's announcement caused other PP makers to reconsider their announcements.
In ABS resins, producers have similar discrepancies among pending price announcements.
GE Plastics of Pittsfield, Mass., previously announced a 9 cent increase for ABS resins, but Dow Chemical Co. of Midland, Mich., and Monsanto Co. of St.Louis announced 6 cent in-creases. Those were to become effective this month.