Judging from the rate at which major resin producers are making pricing moves, you'd think they were playing speed chess.
Announcements that affect prices for polystyrene, polypropylene and PVC are making the rounds. Here is the view from the resin ridge:
The 3 cent increase set for PS April 1 has been dropped, led by market leader Midland, Mich.-based Dow Chemical Co.'s formal withdrawal on March 17.
``There wasn't support for [the increase] in the market,'' Dow PS business leader Bob Koaches said by telephone. ``It wasn't going to happen and we wanted to make it clear to our customers what we were doing.''
Huntsman Corp. of Salt Lake City and BASF Corp. of Mount Olive, N.J., are taking similar action, said officials at those firms.
``I think it's obvious there's not much chance of [the increase attempt] being supported,'' Huntsman PS and expanded PS Vice President David Huntsman said. ``It's not our intent to take customers up at this point.''
Dow and BASF had followed Huntsman on the increase in late February. The attempt came shortly after a 3 cent increase set for Jan. 1 took hold with most buyers.
``If the industry is seriously able to hold the first 3 cents and keep pricing firm it could put us into somewhat of a profitable environment,'' another PS executive said.
North American PS sales and captive use notched a 6.8 percent increase in 1997, while production was up 8.4 percent, according to the Society of the Plastics Industry Inc. in Washington.
Meanwhile, major PP makers have issued a 3 cent increase for April 1 after a similar Feb. 1 attempt failed to go through to most buyers. Montell Polyolefins of Wilmington, Del., led the move, followed by Exxon Corp. of Houston, Union Carbide Corp. of Danbury, Conn., and Epsilon Products of Marcus Hook, Pa.
``We're looking at this as a new increase, not a delay of the first one,'' said Gerald Ferris, Montell's North American business planning manager. ``The first one is over and done. We've had two strong months of demand and we hope to continue that same trend.''
Strong competition hampered the earlier increase attempt, said Epsilon sales and marketing director Michael Pembroke.
``Producers started trading customers instead of pushing overall prices up,'' Pembroke said recently by telephone.
He added that PP makers have seen continued strong demand.
``We're above 92-93 percent capacity utilization,'' he said. ``Our margins shouldn't be where they are if our operating rates are at that level.''
Exxon PP marketing manager Mal Kaus said the increase attempt ``isn't margin-driven'' for his company, which is one of North America's five largest PP makers.
``We're running flat-out and not able to satisfy customers,'' Kaus said.
Kaus added he was optimistic after seeing February industry capacity utilization rates in the 96-98 percent range, putting it on pace for 14.1 billion pounds of production this year. North American PP sales and captive use climbed 7.9 percent in 1997, while production was up 11 percent, according to SPI.
In PVC, Geon Co. of Avon Lake, Ohio, Occidental Chemical Co. of Dallas and Condea Vista Corp. of Houston ended brief holdouts and joined other PVC makers in announcing price-increase attempts. Geon and Oxy will seek 3 cent increases effective April 1.
Some PVC makers previously had announced a 2 cent jump for March 1, then changed to the April 1 scenario. Producers in this group include Formosa Plastics Corp. USA of Livingston, N.J., Borden Chemicals & Plastics of Geismar, La., and Georgia Gulf Corp. of Atlanta, according to industry sources and officials at those firms.
``The industry sorely needs the increase,'' Geon PVC sales director Barry Hendrix said. ``It's warranted from a cost perspective.''
An Oxy spokesman said pricing ``has found its level'' and should be boosted by an upswing in U.S. housing starts, which hit 1.64 million units in February — their highest point since November 1987.
``That's excellent news for the PVC market,'' the spokesman said. ``Now is the time for prices in downstream and intermediate markets to improve.''
Condea Vista PVC sales director Charlie Matson said the new increase has a good chance of success because many buyers have kept inventories low in recent months.
``When the spring surge hits, demand, especially for pipe, will surge as well,'' Matson said. ``[PVC buyers] will probably have more business than they can handle and that will cause them to get their prices up. They'll need a resin increase to spur a price increase.''