Dow Chemical Co. of Midland, Mich., announced Oct. 21 it will roll back prices for film grades of linear low density polyethylene by 2 cents per pound, effective Oct. 1. Dow stressed that the price decrease does not affect other grades of LLDPE or any of its other PE products.
Dow also announced it has invoked a temporary voluntary allowance for a 5 cent-per-pound increase pending for its PE products until Jan. 1. A TVA is a contractual device that allows resin makers to delay the effective date of a price increase.
In interviews by telephone last week, industry executives said Dow's move effectively wipes out the 5 cent-per-pound increase producers were seeking for the fourth quarter. PE makers have added 15 cents to the prices of LLDPE, and high and low density PE since February.
Executives said they believe Dow was responding to aggressive pricing moves started by Formosa Plastics Corp. U.S.A. of Livingston, N.J., and picked up later by Montell Polyolefins, Mobil Chemical and Exxon Chemical.
Formosa started producing butene comonomer LLDPE at its Point Comfort, Texas, plant in 1995. The facility can make 420 million pounds of resin a year.
Montell of Wilmington, Del., also began production of LLDPE in 1995 and, with its start-up phase behind it, began to produce higher value-added resins this year, an executive said. Montell's facility has 440 million pounds of LLDPE capacity.
``We're running the facility full out, and we're marketing the products,'' Howard Rappaport, a Montell executive for new business development in polyethylene, said Oct. 30.
Executives for Mobil of Edison, N.J., and Exxon, of Houston, could not be reached for comment. Nine other producers added incremental amounts of PE production capacity through debottlenecking projects this year, and competition in LLDPE has been brisk.
Even with incremental capacity increases, Len Azzaro, commercial director for PE resins for Dow, said demand remained strong through October. He said Oct. 30 he expects sales to remain strong into next year.
Supplier executives said LLDPE now is in adequate supply, while supplies of LDPE remain tight. Supplies of HDPE - especially injection molding grades - remain very tight.
Separately, some PVC buyers said they have seen a slight softening in PVC markets, while others said orders remain unusually strong. The slight decline in business has shaved 1 cent from PVC resin prices, and producers acknowledged that competition is increasing already tight margins.
An executive for a major PVC supplier said feedstock prices for vinyl chloride monomer have edged up slightly, and may continue to rise through the end of this year.
``This may be a quarter of red ink,'' he said, noting that polymer prices are barely staying ahead of increases in feedstock prices.
Meanwhile, another executive said Oct. 30 that sales in October were uncommonly strong. For PVC resins, October usually is marked by declines in sales as processors, especially those in the construction industries, prepare for winter.
Finally, polypropylene producers quietly have given up an attempt to increase prices. Several producers said they would raise prices 3 cents per pound on Oct. 1, but buyers said they resisted the increase.
Secondary markets for PP began to swell in September, and prices for materials at brokers' and distributors' levels began to decline in October, industry executive said Oct. 29. With that decline, executives at resin producing companies said they also have seen pressure to turn back PP prices, but they are resisting doing so.