Even while a 3 cent-per-pound price increase is on the table for May 1, there were rumors in polyethylene markets that another price increase would be announced for June 1. However, it could not be confirmed by press time on April 25 that any producer announced a further price increase.
PE producers already put a 3 cent-per-pound price increase into effect April 1. Another increase is pending for May 1.
Three executives of resin companies, who spoke on the condition that they not be identified, said prices are rising because of strong demand from a variety of markets, including export markets.
Executives of processing companies said their orders were good, but not booming. Four major processors contacted last week said they were unable to determine which markets could be driving demand to such strong levels.
Based on preliminary industry reports, industry executives said producers' inventories of PE dropped to a level of 34.9 days' supply by the end of March.
Resin company executives said comfortable inventory levels are 40-45 days' supply, which coincides with six-week PE reactor production cycles.
A loose industry rule-of-thumb is that PE inventories below a 40 days' supply indicate prices should increase, and that PE inventories above a 45 days' supply indicate prices should decrease.
While PE demand appears strong, supply in polypropylene is growing, and that is helping to ease tightness in PP markets. Several PP processors said last week they believe a proposed May 1 price increase could be in jeopardy.
PP producers confirmed last week that off-grade markets for PP resins are again growing because more material is available.
Three resin producers contacted last week said they believe the May 1 price increase will be effective, but they conceded that new PP capacity being put into production at Fina Oil and Chemical Co. and at Phillips Sumika Polypropylene Co. may swell the market.
Fina put a 400 million pound line into production in the first quarter, and Phillips is to put a 300 million pound line into production in the fourth quarter.