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February 10, 1997 01:00 AM

RESULTS VARYING FOR RESIN PRICE INCREASES

Bruce Vernyi PLASTICS NEWS STAFF
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    With margins still squeezed by rising feedstock prices, North American producers of commodity thermoplastic resins are reassessing announcements for price increases.

    The disposition of announced increases differs for each commodity resin:

    PET resin producers abandoned their attempts to raise prices by 3 cents per pound.

    PET producers ``shot themselves in the foot,'' a purchasing manager for a large packaging company said last week.

    The ``shot'' was a result of declining prices in 1996, and timing.

    According to the buyer, a major PET resin supplier offered its customers a 3 cent-per-pound discount late in 1996, just weeks before the company announced it would raise prices.

    Competitors became aware of that last discount after they learned of the announced increases, and buyers were jammed with conflicting information.

    In an attempt to restore stability in the market, industry executives said Shell Chemical Co. later announced it would implement a price of 43 cents per pound east of the Rocky Mountains, and 45 cents per pound west of the Rocky Mountains, putting prices generally at the level of the last discount in 1996.

    Shell executives could not be reached to confirm that last week, but executives at five other PET suppliers said unanimously they viewed the action as the final blow to the attempted price hike.

    However, producers said last week that prices remain too low for profitability.

    Several producers said their production lines are running at high capacity-utilization rates, but they also acknowledged that new capacity is scheduled to be put into production by June.

    PVC producers said last week that they expect their 3 cent-per-pound increase for January to take effect, though buyers disagreed.

    PVC makers have announced several price increases, in attempts to raise prices 6-10 cents per pound by March 1.

    The price hikes had effective dates of Jan. 1 for 3 cents per pound, Feb. 1 for 2 or 3 cents per pound and March 1 for 2 cents per pound.

    However, Occidental Chemical Corp. of Dallas added a new twist with an announcement Feb. 3. OxyChem, which previously announced increases of 3 cents Jan. 1 and 3 cents Feb. 1, said it would boost prices another 4 cents per pound March 1, for a total of 10 cents.

    An industry executive said Feb. 4 that he believes the suppliers' increases will be effective.

    ``We have been subsidizing the consumers of PVC since the beginning of the second half of 1996. We can't continue to absorb the continued increased costs of our feedstocks,'' the industry executive said.

    He spoke only on condition that he not be identified.

    Three other executives of PVC-producing companies supported that view.

    However, buyers said they are skeptical that the increases will kick in.

    ``We are expecting prices to go up 2 cents on Feb. 1, and, maybe, another 2 cents on March 1, then a penny on April 1 and a penny on May 1,'' a buyer for a window manufacturer said Feb. 3.

    Five other buyers who were reached last week said they also were skeptical that the increases for PVC would take effect as announced.

    ``What buyers are failing to recognize is the incredibly poor position PVC is in. Margins have not been this bad for a long, long time,'' another executive for a PVC supplier said in response to reports of buyers' skepticism.

    Polyethylene makers' hopes for raising prices faded slightly in January, as prices for some grades continued to soften.

    PE producers delayed their announced increases 30 days, and said last week they now expect increases to be effective — at either 3 or 5 cents per pound — on Feb. 1.

    Every PE maker has announced at least two increases, seeking to add a total of 6-10 cents per pound to resin prices by March or April.

    ``There are very good signs out there [that a price increase will be effective], no one is acting like a weak sister,'' an executive for one PE supplier said last week.

    Meanwhile, price hikes for polystyrene and polypropylene are pending in the market.

    PS and PP makers are seeking a 3 cent-per-pound increase. PS makers have set effective dates of Feb. 1 or Feb. 15, and PP makers have set effective dates of Feb. 15 or March 1.

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