Other major polystyrene makers have joined market leader Dow Chemical Co. in announcing attempts to raise PS resin prices 2 cents per pound July 1.
But Chevron Corp. of Houston isn't following the party line, remaining the only producer among the top six not to support the increase.
Announced price increases in late May or early June were BASF Corp. of Mount Olive, N.J.; Huntsman Corp. of Salt Lake City; Fina Oil and Chemical Co. of Dallas; and Nova Chemicals Inc. of Calgary, Alberta. Dow, based in Midland, Mich., led the field with a May 29 announcement.
The move comes after PS prices dropped 1 cent in May as producers gave back part of the 3 cent increase they achieved earlier this year.
``We've seen continued healthy demand,'' Huntsman PS business director Bill Brengel said in a recent telephone interview. ``This is a very practical and realistic increase.''
Chevron officials countered by saying market fundamentals will not allow processors to support the increase at this time.
``Margins aren't very good right now and all the producers could use a price increase, but we've seen a lot of competitive activity on pricing in the last month,'' said Chevron styrenic polymers specialist Mike Liittjohann.
Nova PS market manager Steven Cummings said he was ``very disappointed that Chevron would choose not to support an industrywide initiative.''
``Given the current level of profitability, I wouldn't be surprised if producers would continue to seek price increases,'' he said.
Officials at Midland, Mich.-based Dow said the upswing is needed because of ``current supply/demand balances and ... the very strong demand of 1997 continuing into 1998.''
``Styrene and polystyrene appear to be long on paper, but they're not long in the real world,'' said Bob Beil, Dow North American PS commercial director.`` They're really snug.''
Beil added that the industry would need three more production trains to keep up with 1997's 6 percent growth rate and would need another train to keep up with the 3 percent growth projected thus far for 1998.
``Our message to our customer base is that if you look at long-term fundamentals — with returns where they're at today — capital decisions won't be made or will be delayed,'' he said.
Another PS executive described the earlier increase as ``a survival increase'' that was needed after profit margins had been slashed to the bone.
``That first increase wasn't supply-and-demand-driven, it was margin-driven,'' the executive said. ``It put us at close to break-even, but now we're feeling a little downward pressure.''
Jean Meador, an industry analyst with Phillip Townsend Associates Inc. of Houston, said she was surprised to learn of the increase attempt after the struggle PS makers went through to implement the 3 cent hike, and because of the short-lived increase attempt that fizzled out in April.
The increase may be in reaction to BASF's plan to add 240 million pounds of capacity in Joliet, Ill., later this year, Meador said.
Meador added that North American PS makers still are feeling ``a ripple effect from lack of export opportunity. ... U.S. prices just don't seem to work in the export market,'' she said.
PS sales and captive use through March are up almost 2 percent over similar 1997 totals, while production is up more than 1 percent, according to the Society of the Plastics Industry Inc. in Washington.