Major North American polyethylene makers have joined Dow Chemical Co. in announcing 5 cent-per-pound price increases set for June 1.
Meanwhile, Mobil Chemical Co. Inc. has placed customers on allocation for high and linear low density PE after manufacturing problems at its Beaumont, Texas, plant.
The list of firms seeking June 1 increases now includes Equistar Chemicals LP of Houston; Exxon Chemical Co. of Houston; Union Carbide Corp. of Danbury, Conn.; Nova Chemicals of Calgary, Alberta; Chevron Chemical Co. LLC of Houston; Solvay Polymers Inc. of Houston; Montell Polyolefins Inc. of Wilmington, Del.; Huntsman Chemical Corp. of Salt Lake City; Formosa Plastics Corp. USA of Livingston, N.J.; Eastman Chemical Co. of Kingsport, Tenn.; and Westlake Polymers Corp. of Houston, industry sources said.
Phillips Chemical Co. of Pasadena, Texas also announced a 5 cent hike, to take effect June 3.
The PE market has tightened in early 1999 as a result of ethylene and PE outages, most notably force majeure incidents at Mobil's Beaumont plant and at an Equistar ethylene facility in Channelview, Texas.
Mobil, which produces 1.6 billion pounds of HDPE and LLDPE in Beaumont, last week began an allocation program that will limit customers' orders to 80 percent of average purchases or minimum monthly purchases in May, June and July.
Mobil had asked customers to reduce orders voluntarily, but that plan did not generate enough material to let Mobil meet its requirements, company spokesman Michael Kimmitt said in a telephone interview from his Edison, N.J., office.
Company officials figure inventory will not be back to normal levels until late July. The production problems are linked to an expansion that added 200 million pounds of capacity to the plant late last year.
Those conditions, along with strong demand early in the year, have enabled HDPE prices to climb 6 cents per pound and LDPE and LLDPE prices to climb 8 cents per pound. In addition to the announced June 1 increases, PE makers are working to push through earlier 5 cent increases set for May 1.
The impact of the industry's various outages already is being felt in the supply chain, according to Exxon PE Vice President Irvin Levowitz.
``We've seen increased demand because of the inability of suppliers to meet requirements,'' Levowitz said in a May 6 telephone interview from Houston. ``There's very strong inventory demand.''
Levowitz declined to comment on material prices, but said buyers are reacting to the perception of tightness in the market. Exxon, which ranks second in North American HDPE and LLDPE production and sixth in LDPE production, has been running its plants all-out to meet demand.
``Indirectly, buyers are trying to buy ahead if they know the market's going to be tight,'' Levowitz said. ``Apparent demand is much higher than real demand. People are ordering more than they actually need.''
Levowitz said he is not concerned that PE capacity expansions set to become available later this year may have a negative impact on the market.
``If the market continues at its normal growth rate, the announced polyethylene expansions are very digestible,'' he said.