Mobil Chemical Co.'s declaration of force majeure last week on high and linear low density PE at its Beaumont, Texas, plant is stretching the North American PE market even tighter. That outage and others in the polyethylene market have spurred Dow Chemical Co., Montell Polyolefins and Huntsman Corp. to announce another 5 cent-per-pound PE price hike for June 1.
Mobil, based in Edison, N.J., declared force majeure April 26 after it was unable to solve operating problems connected to last fall's 200 million-pound debottlenecking of its low-pressure high density/linear low density PE production. The plant now has combined HDPE/LLDPE capacity of 1.6 billion pounds annually.
``Since October, recurring operational problems have caused our inventories to be depleted,'' Mobil spokesman Michael Kimmitt said by telephone April 29.
The firm's recovery plan will include asking customers to take lower shipments of material than they had ordered, Kimmitt said. If this voluntary solution is ineffective, Mobil will have to mandate the allocation of material, he said.
In recent months, Mobil has been obtaining material from other PE makers, Kimmitt said.
The Mobil crisis, combined with ethylene difficulties experienced by Equistar Chemicals, Union Carbide and Shell Chemical and rising PE demand, has tightened supply and allowed producers to raise prices by 8-10 cents per pound, regaining much of the pricing they lost during 1998.
With another 5 cents still on the table for May 1, Dow has taken the lead in announcing yet-another 5 cent move for June 1.
``The ethylene situation is the big driver,'' said Roger Schwartz, Dow's global polyethylene business manager. ``A fair amount of our competitors are having production problems and we've seen very strong first-quarter demand numbers.''
Industry sources said Chevron Chemical Co. and Formosa Plastics Corp. USA had made similar announcements. Officials with those firms could not be reached for comment. Officials at North American HDPE/ LLDPE market leader Equistar Chemicals LP declined comment.
In other pricing-related moves, Plastics News is adjusting its resin chart prices for film grades of HDPE to show a 4 cent increase in April.