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February 14, 2000 01:00 AM

PVC prices extend upswing; PE, PS waver

Frank Esposito
Senior Staff Reporter
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    PVC prices continued to rise in January, while polyethylene prices continued to dip and polystyrene makers pushed their price-increase attempts back into February. Prices on suspension-grade PVC now have climbed a remarkable 16 cents per pound since January 1999 — an increase of about 64 percent on pipe-grade materials.

    PVC makers and buyers point to continued tight supply and lack of new capacity as reasons for the surge, which has continued unabated through the winter months, a season that traditionally has been a poor one for the construction-heavy PVC market.

    High sales and a variety of outages have put PVC makers' January 2000 inventories at a level 150 million pounds lower than they were a year ago, according to industry sources.

    In some cases, producers have switched production from commodity grades used in pipe and siding to more high-margin areas such as medical grades, resulting in continued tightness in construction markets, sources said.

    But several processors complained that additional price increases may harm their businesses.

    "If prices go higher in March and April, they'll be seeing competition from ductile iron ... and other materials," one Midwestern processor said. "Prices may be getting too high, which raises the risk of them crashing like they did in '95."

    PVC makers may not be heeding this advice, however, as Oxy Vinyls LP and Georgia Gulf Corp. each announced 2 cent price increases for March 1, according to several sources.

    Over in PE, prices for high, low and linear low density resin dropped an average of 1 cent per pound in January as prices receded a little from the dizzying heights they reached in 1999. The January drop comes on the heels of similar drops in November and December.

    HDPE, LDPE and LLDPE prices had soared an average of 16-18 cents per pound in 1999.

    Producers also have pushed back a 4 cent price hike that had been scheduled for Jan. 1. Processors said Union Carbide Corp. and ExxonMobil Chemical Co. were among the first producers announcing the delay to Feb. 1, several processors said.

    A number of processors added that Phillips Petroleum Co. had reduced the amount of the Feb. 1 increase for HDPE to 3 cents per pound. Phillips officials could not be reached at press time.

    Dow Chemical Co. has a 5 cent hike announced for March 6. Union Carbide and Equistar Chemicals LP have similar increases scheduled for March 1, but ExxonMobil and Solvay Polymers have countered with 3 cent attempts for the same date. Phillips also reportedly is in the 3 cent camp for March 1.

    An Ohio-based PE buyer said a rise in business from Chinese buyers, following the Chinese New Year, could give the February increases some teeth. Chinese buyers could buy up available off-spec and wide-spec resin, forcing U.S. buyers to use more prime material.

    The year-end price dip also could be linked to producers' need to lower their year-end inventories, according to several processors.

    "There were a ton of cheap cars of linear low out there in the fourth quarter," a Texas-based processor said.

    Major HDPE/LLDPE expansions at Canadian plants operated by Nova Chemicals Corp. and Union Carbide aren't expected to affect the North American PE market until late 2000.

    In the PS market, major suppliers declined to support a 5 cent increase that Nova had announced Jan. 1. Instead, suppliers have opted for 3 cent increases for Feb. 1. Additional 4 cent increases have been announced for March 1.

    PS makers are trying to regain the momentum that allowed them to raise prices an average of 10 cents per pound in 1999.

    A Nova executive said the delay was not necessary, even though his firm matched it.

    "We still believe the fundamentals are in place and that seeking 5 cents for Jan. 1 was right," the executive said.

    North American PS sales were up about 3 percent through the first 11 months of 1999, according to the Washington-based American Plastics Council.

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