AKRON, OHIO — Continuing oversupply drove polyethylene prices down 1 cent in February, while wet weather contributed to a similar drop in suspension PVC, according to several buyers contacted recently.
PE buyers cited oversupply and slumping raw material costs as reasons for a 1 cent downturn. The reduction is shown for all grades of high density, low density and linear low density PE in this week's Plastics News resin pricing chart.
``Demand is soft in all packaging segments, especially in film and other flexible packaging,'' a Chicago-based buyer said.
A North Carolina-based buyer said he ``didn't have a lot of faith'' in the pending increase attempts, which have been reconfigured several times because of declining raw material prices. Ethylene prices dropped 1 cent in February as well.
``Ethylene keeps going down and [PE makers] keep putting out price increases,'' he said. ``That's just amazing to me.''
PE makers ``overplayed their card and used their last trump'' by turning an earlier 3 cent increase attempt into the current 5 cent effort, the Chicago buyer said.
The PE drop comes as several PE makers are gathering force for a 5 cent increase attempt set for mid-March or April 1.
Dow Chemical Co. of Midland, Mich.; Nova Chemicals in Calgary, Alberta; Exxon Corp. and Equistar Chemicals, both of Houston, all are seeking the 5 cent boost. Mobil Chemical Co. of Edison, N.J., has a 5 cent jump split between two increases, while Solvay Polymers of Houston plans to hike HDPE prices 3 cents April 1.
Len Azzaro, PE business director at Dow, North America's second-largest PE maker, said the larger increase was needed to allow resin buyers to pass the cost along to their customers.
``You can't do a 5 cent increase on the fly,'' Azzaro said. ``When you do it, it's more strategic.''
He added the North American film market remains strong and Dow is in a sold-out situation on PE. He added that the impact of the Asian economic crisis and of new ethylene capacity coming on later in the year both are being exaggerated in early 1998.
``Everybody wants to read doom and gloom so they buy that way,'' he said. ``But our trains are running full out and our inventories are low.''
In PVC, both producers and buyers said the market should stabilize as spring approaches, in spite of the 1 cent drop in February.
``We might see another cent in March, but I don't think it'll drop too much more,'' a Texas-based buyer said.
A soft Asian export market and significant amounts of rain in the southern United States, where construction normally would pick up this time of year, are affecting the market, according to a Missouri-based buyer.
The PVC pipe market, which one resin executive characterized as ``completely undisciplined,'' continues to add volatility, as some pipe officials have reported seeing resin offered at prices 3-4 cents below the industry average.
Expecting better things ahead, PVC makers Formosa Plastics Corp. USA of Livingston, N.J.; Borden Chemicals & Plastics LP of Geismar, La.; and Georgia Gulf Corp. of Atlanta have announced 2 cent hikes effective March 1.