Polypropylene makers have been able to push through additional price increases since April 1, while tough conditions continued in the first quarter for polycarbonate and nylon resin makers.
PP prices climbed an average of 3 cents per pound since the start of the month and now are up an average of 5 cents per pound for the year. By comparison, prices fell an average of 7 cents per pound in 2001, according to the Plastics News resin pricing chart.
There appears to be little supply-and-demand dynamic behind the moves. Instead, PP makers have their backs to the wall and are not budging from the announced moves, said several buyers contacted recently.
``[PP] producers have got their swagger back,'' a Midwestern PP buyer said. ``So far, they're not backing down.''
A Chicago-based PP buyer reported increased demand for the material in both rigid and flexible packaging, including containers for food and dairy products.
``[PP] is still a low-cost resin that a lot of designers reach for first,'' the buyer said.
British Petroleum plc's decision to shutter permanently about a billion pounds of capacity at its Texas plants could have a short-term effect on the market, even if it is only a psychological one, industry contacts said. The firm had idled a 450 million-pound-capacity line in Alvin, Texas, late last year and will close a 575 million-pound site in Baytown, Texas, in June.
Combined, BP, Basell Polyolefins and Huntsman Corp. have idled about 1.6 billion pounds of capacity since early 2001. But BP's latest move will be offset by Phillips Petroleum Corp.'s launch of a 700 million-pound plant in Linden, N.J., by mid-2002.
``We're seeing demand pick up,'' said Craig Blizzard, marketing director for PP maker Basell Polyolefins of Wilmington, Del. ``At the low-price end of the market, there's increased reluctance on the part of our competitors to supply product.
``There's a lot of scrambling going on as people recognize that the [PP] price is moving. We just heard from a customer who we hadn't heard from in three years who was looking for material.''
The North American PP market saw ``low-single-digit'' growth in the first quarter, as sales into automotive uses remained solid, although sales into fibers remained ``a little weak,'' said Blizzard.
Most major PP makers have announced further price increases of 3 cents per pound for May 1. Atofina Petrochemicals Inc. and Equistar Chemicals LP originally set the date as April 1, but may move their dates back to match their competitors.
In PC, prices fell an average of 10 cents per pound in the first quarter as demand continued to shrink, said several recently contacted buyers. Decreased capital spending in the information technology and telecommunications sectors played a major role in the pricing and demand slump, industry contacts said.
The drop translates to an average of 14 cents per pound on general-purpose, injection molding grades of PC on Plastics News' resin pricing chart. Prices already had fallen an average of 8 percent since early 2001.
Average selling prices for PC/ABS blends also have been affected by the slowdown and have dropped an average of 8 percent, or 14 cents per pound, since early 2001.
Market leader GE Plastics of Pittsfield, Mass., has attempted to reverse this slide by announcing 9 cent-per-pound increases on PC and PC/ABS, as well as 8 cents a pound on ABS and its Noryl-brand polyphenylene oxide, and 3 cents a pound on its Valox-brand polybutylene terephthalate.
Competitors Bayer Corp. and Dow Chemical Co. have announced similar price increases for PC. Higher prices for benzene feedstocks are playing a role in the increase attempts, industry contacts said.
``There's been a lack of demand [for PC] and producers aren't used to it, since they had been selling everything they made,'' said Ben Smith, an industry analyst with Chemical Market Associates Inc. in Houston.
The optical media market, which accounts for 13 percent of U.S. PC demand, also is at something of a standstill. Growth rates for recordable compact discs are up, but audio CD sales remain depressed, partially because of the proliferation of music downloading via the Internet, Smith said.
Digital video discs are offering a ray of hope, having equaled videotape sales for the first time in December. Low-price DVD players are giving the format a major boost, Smith added.
U.S. PC operating rates should settle at 75-80 percent this year after being around 85 percent last year, said Smith. Previously, those rates had been above 90 percent every year from 1992-2000.
Nylon prices continued to plunge in the first quarter as automakers sold off inventory amid slowing growth rates. Automotive uses account for roughly 40 percent of all nylon resin sales.
Average selling prices for nylon 6 and 6/6 each fell an average of 10 percent. In nylon 6, that equals a drop of about 12 cents per pound, while in 6/6, the average drop was 13 cents per pound.
Prices for nylon 6 had dropped 12 percent on average in 2001. Nylon 6/6 prices slipped an average of 13 percent in the same period.
The 2002 market has bottomed out and is on the mend, said Mike Warner, president of nylon maker and compounder Custom Resins Inc. in Wayne, N.J.
``Things are definitely firming up,'' Warner said. ``A number of our markets have been stronger this year.''
``The automotive market has been stronger than we thought it would be, even if car builds are off a little bit,'' he added. ``Nonautomotive markets like extrusion also are looking good.''
Warner estimated nylon plant operating rates currently are around 80 percent. Custom Resins has no plans to add resin capacity, but will add a new twin-screw compounding line and debottleneck another at its Henderson, Ky., plant later this year.
North American nylon sales were down 15 percent in 2001, according to the American Plastics Council in Arlington, Va. Sales volume dropped from almost 1.4 billion pounds to less than 1.2 billion. Domestic production receded from almost 1.3 billion pounds to just over 1 billion.
Plastics News also is adjusting down prices of engineering thermoplastic grades of ABS used in injection molding by an average of 8 percent. The move is designed to reflect decreased demand for those high-end materials since early 2001.