A slowing economy and abundant supplies of material have combined to push prices of polypropylene and solid polystyrene down an average of 1 cent per pound since early February.
Processors reported plenty of PP available, effectively scuttling price increases that had been announced for Feb. 1 and March 1. Formosa Plastics Corp. USA, based in Livingston, N.J., loosened the market in late March by beginning commercial production at its 700 million-pound-per-year plant in Point Comfort, Texas.
"The new capacity is being added to keep pace with industry growth estimates," Formosa PP General Manager Ken Mounger said in a news release. "Despite short-term market conditions, the long-term outlook for polypropylene is still quite positive."
Sales in the U.S./Canadian PP market were flat in 2000. PP sales into transportation were flat as well, while sales into consumer products such as furniture and housewares were down almost 5 percent, according to the American Plastics Council in Arlington, Va. Those two markets accounted for more than 16 percent of total U.S./Canadian PP sales last year.
An industry source said preliminary APC sales numbers for January show more than 10 percent growth when compared to January 2000. However, the source pointed out that January 2000 was not a typical month, since resin buyers cut back on purchases after pre-buying in late 1999 out of fear of Y2K-related complications. As a result, January 2000 numbers were much lower than they normally would have been.
PP maker Huntsman Corp. of Salt Lake City had not lowered its prices as of April 12, PP business manager Steve Litherland said.
"Most producers are at near break-even levels right now, so to push it lower than cash levels wouldn't make a lot of sense," Litherland said.
A Chicago-area PP buyer said there is "quite a bit of softening" in some areas of the market.
"It's going to be real interesting to see what happens in the next couple of months," the buyer said.
In PS, demand is slowing in the the vital food packaging market, as well as electrical/electronic applications. As a result, PS makers have struggled to push through 3 cent-per-pound increases announced for April 1. Most processors contacted said they did not expect to see the increase take hold unless a drastic change in the supply-demand equation took place.
A potential battle between PS market leader Nova Chemicals Corp. of Pittsburgh and distribution giant General Polymers of Dublin, Ohio, also could impact the PS market this year, an industry source said. The two firms are in the process of ending a distribution agreement and are likely to compete over Nova accounts that had been served through GP, the source said.
According to industry estimates, Nova sells between 80 million and 160 million pounds of PS through distributors such as GP each year.
But a Midwestern PS buyer pointed out PS makers have merely delayed price increase attempts rather than pull them off the table.
"[PS makers] still think they deserve an increase in spite of [prices for] styrene monomer going down," the buyer said.