Polyethylene prices are continuing their yearlong slide, with U.S. buyers and producers reporting an additional 1 cent drop since early October.
``People thought contract ethylene was going to increase, but it didn't,'' a Virginia-based high density PE buyer said. ``When that happened, any justification for holding the price went away.''
The 1 cent drop applies to all grades of high density, low density and linear low density PE and is reflected in this week's Plastics News resin pricing chart.
PE prices have dropped an average of 10 cents per pound so far in 1998.
``There continues to be some erosion,'' said one resin-producer executive. ``But none of the fundamentals for a price increase are there right now, aside from unsatisfactory margins among producers.''
PE manufacturers Solvay Polymers, Phillips Petroleum Co. and Equistar Chemicals LP, all of Houston, hope that situation turns around, as each has announced price increase attempts on HDPE for Jan. 1. Solvay and Phillips each are seeking 3 cent boosts, while Equistar will try to raise prices 5 cents a pound.
An Ohio HDPE buyer said PE makers will have to overcome several factors — including processors' desires to keep inventories low, low oil and natural gas costs and 400 million pounds of new capacity at Fina Oil and Chemical Co.'s Bayport, Texas, plant — for that increase attempt to become a reality.
Exxon Corp. and Westlake Polymers each are adding HDPE/ LLDPE swing capacity as well. Exxon's new 550 million-pound line came on stream last month in Mont Belvieu, Texas, while Westlake will add 500 million pounds of capacity in Lake Charles, La.
``I think the series of continued price increases is recognition that there are too many huge players in the market today,'' the buyer said. ``There are a lot of people trying to move a tremendous amount of pounds.''
Donna Todd, an industry analyst with Phillip Townsend Associates Inc. in Houston, said LLDPE makers have fought all year to protect their market shares, while HDPE producers have fought recent battles to keep Fina's new material from finding a home.
``Everybody's scared to death of Fina,'' Todd said. ``But demand has been very good given the new plants. I don't think there will be much more erosion in November and December.''
Through September, North American HDPE sales and captive use had increased by 4.2 percent, according to the Society of the Plastics Industry Inc. in Washington. LLDPE sales have risen 1.6 percent; LDPE sales have dropped 2.6 percent.