In an apparent effort to check declining prices, polystyrene producers announced in mid-February a 4 cent-per-pound price increase. The announcement puts PS buyers in the same position as polyethylene, polypropylene, and PVC buyers: They have price-increase announcements on their desks that are to be effective in the coming days, and they are wondering if prices will, indeed, go up.
Dow Chemical Co. of Midland, Mich., Huntsman Chemical Co. of Salt Lake City, and Chevron Chemical Co. of Houston announced separately they would increase prices for PS by 4 cents per pound on March 15. Later, Fina Oil & Chemical Co. of Dallas and BASF Corp. of Parsippany, N.J., followed the market leaders with similar announcements for their products.
The announcements came on the heels of 3-5 cent drops in market prices for PS between mid-December and the end of January. Those decreases are noted in today's Plastics News pricing charts.
Now price increases - ranging between 6 and 15 percent - are pending for each of the high-volume thermoplastics, while orders for finished and semifinished products made from the resins are good, but not booming.
Plastics News interviewed executives for six distributors of volume thermoplastics and seven buyers of volume thermoplastics by telephone Feb. 20-21. The distributors are located across the United States, and serve wide distribution areas. The buyers work for producers of finished and semifinished goods that are geographically dispersed throughout the United States and Canada.
The following situation reports are based on those interviews. The outlook for each resin is different:
Supplies of low density and high density PE are generally seen to be tightening, while supplies of linear LDPE are looser, suppliers and distributors said last week.
Even with the general tightening for HDPE, a skirmish has been fought for market position in dairy applications between makers of blow molding homopolymers.
That skirmish has led to price decreases for HDPE used by dairies, dropping prices for those resins by 6 cents a pound since January. The latest decrease in price for blow molding, homopolymer dairy HDPE resins is noted in today's pricing chart.
Homopolymers for dairy applications now are one of the best buys in PE markets, but other buyers are not seeing the same battles for market position.
Distributors and buyers expect continued tightness for HDPE and LDPE, and believe that tightness will support price increases announced for those resins. Meanwhile, they said they expect prices for LLDPE to remain softer.
Buyers speculated that the softer prices for LLDPE and higher prices for HDPE and LDPE could cause a cost-vs.-performance gap that would induce some processors to shift applications to LLDPE.
As a result, buyers expect HDPE and LDPE sellers to move gingerly before imposing price increases.
In PE, price increases of 3-5 cents per pound were announced in mid-December and were to become effective in January, but they have been pushed back to March 1.
Prices for near-prime, wide-spec, and off-grade PE resins already have increased 3-5 cents per pound, and the availability of those grades has been declining.
Distributors and buyers currently are divided about whether prices for prime PE will increase or will remain stable through March.
Some said they expect to be billed at higher prices for HDPE and LDPE in March, while hoping the higher prices will be rebated by the middle or end of the month.
Many distributors and buyers said they believe producers are seeing large increases in export sales and those orders, especially from China, are drying up domestic resin supplies.
One distributor said three PP suppliers he works with are sold out because of sales to China yet, he added: ``My sales are not jumping through the roof.''
Buyers said their business is good but not booming, and because of the lack of dramatic growth they see reasons for the price increase as vague.
However, buyers do not argue that PP resins are readily available. Almost everyone contacted said they saw markets for wide-spec and off-grade PP resins dry up in the past few weeks, and that they see current supplies of prime PP as tight.
``PP was coming out of your ears in December. Today, nobody has a damned thing. You just can't get product,'' an executive said.
With that scenario, buyers and distributors said they believe the 3 cent-per-pound price increase announced for PP for March will be put into effect in the market.
``This market turned around very quickly, and we don't see it going back any time soon,'' another executive said.
PS buyers and distributors consider PS sellers to be at the same point today that PE buyers were at in December and early January: The producers just saw their prices erode, and they want to prevent further erosion by announcing a price increase.
However, while PE producers saw a slight decrease in January and February in the prices for ethylene, their primary raw material, PS producers saw a slight increases in January for the price of their primary raw material, benzene, and are facing a 2 cent-per-pound increase for styrene monomer on March 1.
``When the prices for raw materials go up, we always see an increase in the prices for polymer,'' one PS distributor said.
Because of the higher prices for raw materials - coupled with the announcements for price increases for the other volume thermoplastics that helped to change the market psychology - PS distributors and buyers indicated they are not as skeptical about a price increase as were PE and PP buyers several weeks ago.
However, PS buyers and distributors also said they have not seen the wide-spec markets for PS resins dry up as those markets for PE and PP have. PS buyers said they see that as an indication that suppliers still have plentiful amounts of prime resins.
Distributors and buyers said their suppliers have indicated orders for PVC from China and other export destinations are picking up.
The increase in export demand is expected to match or exceed increased demand for pipe resins. Orders for PVC pipe are expected to be boosted by the annual spring surge in housing and business construction starts.
With those expected increases in demand, buyers and distributors said they expect a 2 cent-per-pound price increase to go through. The increase was announced for March 1.