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May 06, 1996 02:00 AM

HDPE SUPPLIERS PLAN MORE PRICE INCREASES

Bruce Vernyi
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    The leading producers of high density polyethylene announced last week they intend to increase prices another 4 cents per pound June 1. The move would increase prices 10 cents per pound for the first half of this year, presuming that the latest announcements - and pending increases that were due to be in place May 1 - take effect in the market.

    Led by Phillips Chemical Co. of Bartlesville, Okla., the following companies all announced 4 cent-per-pound increases last week: Quantum Chemical Co. of Cincin-nati, Paxon Polymer Co. of Baton Rouge, La., Lyondell Petrochem-ical Co. of Houston, Fina Oil and Chemical Co. of Dallas, Exxon Chemical Co. of Houston, Solvay Polymers Inc. of Houston, and Union Carbide Corp. of Danbury, Conn. Phillips made its announcement to its customers April 22.

    Dow Chemical Co. of Midland, Mich., and Chevron Corp. of Houston previously announced increases for HDPE resins that total 10 cents per pound, but the companies delayed portions of those increases.

    Dow and Chevron officials could not be reached for comment before deadline last week, but executives of other companies and industry analysts said they now expect those two firms to remove the temporary voluntary allowances they set on their increases, and to put their full increases into effect in June.

    Dow and Chevron previously made similar announcements about their low and linear low density resin products.

    If effective in the market, the cumulative HDPE price hikes would match - at 10 cents per pound - increases announced for LDPE and LLDPE in the first half of this year. Prices for LDPE and LLDPE rose 5 cents per pound April 1, and were due to rise by another 5 cents a pound on May 1.

    Prices for most HDPE grades went up 3 cents per pound April 1, and were to increase another 3 cents May 1. Several firms - Lyondell and Exxon among them - increased prices for high-molecular-weight HDPE by an additional 2 cents per pound on May 1. With the latest announcements, prices for HMW HDPE will go up 12 cents per pound in the first half of this year.

    It has not been confirmed that the May 1 increases were effective in the market, but industry analysts said last week they believed producers would put the increases through.

    Don Brady, Phillips' general manager for PE products, said the additional increase is based on continued strong worldwide demand for PE, which has reduced inventories while the industry is operating at nearly 100 percent of its production capacity. Further, Brady said profit margins for PE are at or near all-time lows, and are being squeezed further because of rising feedstock prices.

    Other executives also said they see very strong export demand, and continued good demand in North America for HDPE, LDPE and LLDPE, especially in packaging markets. Executives of the other HDPE producing firms said they saw prices for feedstocks rising, squeezing their margins.

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