AKRON, OHIO — A lack of full industry support has led polystyrene market leader Dow Chemical Co. to pull back its attempt to raise prices by 2 cents per pound effective July 1.
Midland, Mich.-based Dow announced the increase attempt in late May and soon was joined by BASF Corp. of Mount Olive, N.J., Huntsman Corp. of Salt Lake City, Nova Chemicals of Calgary, Alberta, and Fina Oil & Chemical Co. of Dallas.
Chevron Corp. of Houston had been the only top-six producer that did not support the move. Officials there cited competitive activity on pricing as a reason for their holdout.
Dow officials said the underlying market fundamentals that led the company to announce the increase have not changed.
``Industry demand remains strong,'' Dow PS senior marketing manager Bob Koaches said. ``However, current market response has caused us to withdraw our pricing initiative at this time.
``Our customers need to know our position as early as possible to allow them to adjust their plans accordingly,'' he added.
The move marks the second time in four months that Dow has rescinded a PS price increase attempt. In March, Dow withdrew an April 1 move led by Huntsman, after Fina, Nova and Chevron declined to support it.
The April 1 attempt came shortly after PS makers successfully implemented a 3 cent price increase. Market prices eroded 1 cent per pound in May, but Koaches said that slight downturn did not affect the company's decision on the July 1 initiative.
Dow also warned that the lack of pricing support could have repercussions throughout the PS industry and could cause the delay of capacity expansions that will be needed in a few years.
``The PS business is not overly profitable right now,'' Koaches said in a recent telephone interview. ``Anything a [PS] company may look to do in North America will be compared to other opportunities across the company. Businesses will look at their returns and see where they're making the most profit.''
The only notable 1998 expansion in North American PS capacity will occur later this year when BASF adds 240 million pounds at Joliet, Ill.
BASF officials said they expect to stay the course on the increase attempt.
``The PS business has just been through a tough year and we need additional market improvement,'' BASF PS marketing and sales director Kevin J. McQuade said in a June 15 interview at Plastics News' office in Akron. ``The market's somewhat snug right now and it can bear a 2 cent increase.''
Officials at Huntsman, Nova and Fina could not be reached for comment.