Polystyrene makers moved prices up in April, while polyethylene producers are slugging it out in a pricing scenario that has more twists and turns than a bowl of spaghetti on a trampoline. PS prices rose an average of 3 cents per pound in April, as continued pricing and supply pressure from styrene monomer markets and strong demand propelled producers to action.
"It's been mainly cost-driven," said Jeff Denton, PS business director for Dow Chemical Co., the Midland, Mich.-based firm that ranks second in North American PS production. "[PS] producers really got nailed in the first quarter and couldn't get prices up as quickly as styrene was going up. We're still playing catch-up."
U.S. PS demand was up more than 5 percent through February, according to the American Plastics Council in Arlington, Va. Food-service end uses were leading the way with growth of almost 22 percent in that period.
Major producers are seeking additional 4 cent-per-pound increases May 1, but are split on price actions for June. Market leader Nova Chemicals Corp. of Calgary, Alberta, is seeking a 5 cent increase June 1, but Dow is opting for a 3 cent increase June 15.
Market watchers said that split, as well as a leveling off of styrene prices, may slow PS pricing momentum as summer approaches. PS prices already are up an average of 10 cents per pound in 2000.
"The [styrene] argument is beginning to fade," a Massachusetts-based PS buyer said. "We should see the top of the market soon. Suppliers are being vague about the amount [of the increases], and that's usually a sign that things are slowing down."
Industry contacts said short-term supply could be affected by an outage at Chevron Chemical Co.'s plant in Marietta, Ohio, but Chevron officials could not be reached to confirm that event.
Higher PS prices have led to some defections to lower-priced polypropylene in some consumer-goods applications, while on the higher-end, PS prices have moved close enough to ABS prices for processors to consider making the switch to costlier ABS and benefit from improved performance.
"It's at the edge where you can buy low-priced ABS close to what you'll pay for prime high-impact polystyrene," a New York-based PS buyer said.
In PE, pricing moves by Nova and Solvay Polymers of Houston are muddying the waters surrounding 5 cent-per-pound increases that PE makers had nominated for April 1.
Solvay had split the 5 cent increase into a 3 cent move for April 1 and a 2 cent hike for May 1, while Nova had pushed the entire 5 cent attempt back to May 1, according to industry sources.
A majority of processors contacted said they had not seen the April 1 increases take hold, although many said they still were in discussions with their suppliers.
"Processors' inventories are filling up because of pre-buys from the other two increases," a Midwestern PE buyer said. "I'm not sure producers are seeing the real tightness they had anticipated."
Chevron and Phillips Petroleum Co. in Bartlesville, Okla., each are sticking to the 5 cent increases for April 1, officials said.
"The blow molding market looks strong and sheet and pipe are also solid," Phillips PE business director Tim Roberts said. "I don't know why anyone would back off a price increase."
Phillips' HDPE supplies remain tighter than normal because of a voluntary one-week shutdown that followed an earlier explosion at the firm's K-Resin unit. That shutdown came shortly after Phillips took a planned turnaround that also depleted its HDPE inventories, Roberts said.
A leveling off in prices of ethylene feedstocks also has taken away some upward momentum from PE prices, according to several contacts.
"Price implementation has been very inconsistent," said Howard Rappaport, a consultant with Chemical Market Associates Inc. in Houston. "It's almost being done on a company-by-company basis."
PE prices have climbed an average of 6 cents per pound to date in 2000.
Through February, U.S. HDPE sales were up almost 4 percent, while linear low density PE sales were up almost 7 percent and LDPE sales were up almost 1 percent, according to APC.