AKRON, OHIO — PET resin producers announced a 3 cent-per-pound increase effective Jan. 1, in an attempt to gain back margin and to cope with proposed cost increases for their raw materials.
In 1996, PET producers saw prices fall 42 percent — from an average of 76 cents per pound to an average of 44 cents per pound — as production capacity for key raw materials, especially paraxylene, increased.
Prices for paraxylene dropped from 41 cents per pound in January 1996 to 19 cents per pound by December.
Paraxylene producers have proposed a 2 cent-per-pound increase for Jan. 1. Further, ethylene glycol makers have nominated price increases of 2-5 cents per pound for Jan. 1. Those price hikes have not been settled.
However, Bunky Seahy, manager of polyester products for Eastman Chemical Co. of Kingsport, Tenn., said PET producers cannot take the squeezing of their profit margins any longer.
``We saw a tremendous drop in prices in 1996. With these nominations for raw materials, we are looking at further margin squeezes, and PET manufacturers can't absorb any further loss of margins,'' Seahy said.
Seahy added that the Jan. 1 increase for PET only would provide PET makers a portion of the margins they lost in 1996.
Eastman and other major producers — ICI Chemicals and Polymers Co. of Wilmington, Del., Wellman Inc. of Shrewsbury, N.J., and Shell Chemical Co. of Houston — have announced similar Jan. 1 increases.
Now, however, PET producers are waiting to see if their increases will be effective in the market.
``PET production capacity now is in balance with demand,'' said Mike Dewsbury, business manager for PET resins for Wellman.
``However, ... [the industry has] 1 billion pounds of new capacity scheduled to come on stream in 1997. The prospect of that coming on line is helping to keep prices depressed.
``I'll bet some of that capacity doesn't get put on line as quickly as it is scheduled to,'' he said.
Or, he noted, if the newer, more-efficient capacity is put into production, older, less-efficient capacity may be mothballed so the market is not glutted.
Almost all of the major producers of PET worldwide have projects under way to increase capacity throughout the world.
Because of Plastics News' policy of following pricing movements in the market, prices for PET resins in this week's resin pricing chart reflect a decline that occurred in the fourth quarter of 1996. Next week's resin pricing chart will note the pending price increase.
Separately, PVC producers, who saw their prices fall through the latter half of 1996, also announced a price increase for Jan. 1. PVC makers also are trying to raise prices by 3 cents per pound.