Pricing shake-ups are continuing in the early months of 2000, with extrusion-grade ABS prices soaring, solid polystyrene prices climbing and PVC prices taking a breather after a 14-month upward sprint. Strong construction markets and a lack of new capacity have propelled sheet-grade ABS up 14 cents per pound and pipe-grade ABS up 20 cents per pound since last fall. That's an increase of roughly 32 percent on pipe material and 18 percent on the sheet side.
Two rounds of increases have been pushed through, and major producers GE Plastics of Pittsfield, Mass., and Bayer Corp. of Pittsburgh are working on additional 7 cent and 8 cent increases that are to take effect in mid-March and early April.
"These increases have legs," a Midwestern processor said. "Polyethylene and polystyrene go up and down like clockwork, but ABS hasn't done this since '95. ABS buyers aren't used to it."
The buyer added that the withdrawal of 80 million to 100 million pounds of Asian material each year from the North American market since Asia's 1997 economic crisis also has tightened supply and moved prices up.
Sales of ABS, SAN and other styrenics into the North American building and construction market climbed more than 13 percent in 1999, according to the American Plastics Council in Arlington, Va.
A second price increase on injection molding ABS grades still is being negotiated with buyers. Prices on those materials climbed an average of 5 cents per pound in January.
"We've seen strong demand and price pressure from styrene and acrylonitrile as well," one industry executive said. "That had a big effect, especially when the Asians backed off."
In PS, 3 cent increases set for Feb. 1 have taken hold with most buyers. Top producers Nova Chemicals Corp. of Calgary, Alberta, and Dow Chemical Co. of Midland, Mich., have announced 4 cent increases for March and 3 cent increases for April as well, with Nova throwing in an additional 4 cent increase for May 1.
"If you look at oil costs, you can see some pretty strong justification for the price increase getting through," said Jeff Denton, Dow North American PS marketing manager. "Oil increases are touching everything right now. Everybody's going to the gas pump and seeing it happen."
Denton added that the expected summer boost from sales of disposable cups and other packaging products is adding to producers' optimism.
"The price of oil is rocketing and two-thirds of polystyrene price comes from the crude-oil stream," a Missouri-based PS buyer said. "If you see gas go up, there's a good chance you'll see polystyrene go up."
PS prices have climbed an average of 13 cents per pound since January 1999. U.S. PS sales were up almost 4 percent in 1999, with packaging uses leading the way with a 9 percent jump, according to APC.
In PVC, producers have delayed 2 cent increases set for February back into March, after processors complained of difficulties in passing a barrage of price increases on to their customers. PVC prices have climbed an average of 16 cents per pound since January 1999.
"We heard some concerns about customers crossing over to polyethylene or ductile iron [because of high PVC prices]," said Dave DiPiero, PVC business director for Formosa Plastics Corp. USA of Livingston, N.J. "Plus, there was a lot of confusion over who had announced what, so we thought the market could use a breather."
But DiPiero added he's confident that construction demand will continue and allow producers to enforce increases in March.
"It looks like the PVC market is establishing a higher pricing standard for the next year or two, based on demand growth and a lack of new capacity," he said.
Domestic PVC sales in the United States and Canada jumped more than 7 percent in 1999, sparked by an increase of more than 8 percent in sales to the pipe market.