Selling prices for suspension PVC and PET bottle resin jumped in the first month of 2003, while prices for polypropylene and solid polystyrene appear to be headed that way after experiencing some erosion in the final quarter of 2002.
``We needed the increase because of raw material pressure,'' an executive with a major PVC maker said of the 2 cent-per-pound increase. ``It helped that the housing market was a little bit better than normal in January and that [PVC users] didn't de-stock inventory like they did at this time last year.''
The pipe market, which represents PVC's single-largest end use, saw business pick up in January. Although pipe inventories are starting to build in the Midwest and Northeast, pipe supplies in the Southeast remain somewhat tight, sources said.
``It's pretty simple,'' a Midwestern PVC buyer said. ``If pipe doesn't move, people stop buying resin and [pipe makers] have to shut lines down.''
The PVC increase comes after prices dropped a total of 3 cents per pound in the last four months of 2002. Additional per-pound increases of 2 cents for February and 4 cents for March are on the table as well.
The PVC executive said there were signs that buyers already were trying to pre-buy in advance of future increases, but he added that his firm is working to limit buyers to contract amounts.
Talk of lost production at Shintech Inc.'s plant in Addis, La., proved to be exaggerated.
Shintech controller Dick Mason said the plant did experience an outage for part of a single day in January, but the brief incident had no impact on the firm's overall PVC supply.
Mason also described current inventory levels for both PVC resin and pipe as ``in line and not excessive.''
Cost concerns also could lead PVC makers to shake up their inventory patterns in 2003. A Texas-based PVC buyer said resin inventories dropped as low as five days on hand in 2002 and might continue in 2003 at 15-20 days rather than the 30-day level that had been common.
Through November, U.S./Canadian PVC sales had climbed more than 3 percent in 2002, according to the American Plastics Council in Arlington, Va.
Tightness and price pressure in feedstocks ethylene glycol and paraxylene enabled PET makers to win 5 cent-per-pound price hikes in January. Similar increases have been announced for March.
``It's live and it's in the marketplace,'' a Southeastern PET buyer said. ``And if you look at [PET makers'] margins and their raw material base, you have to think the March [increase] has a chance, too.''
Several PET market watchers said producers are making the pricing moves while keeping an eye on 900 million pounds of new capacity set to arrive in North America this year via expansions by M&G Group and DAK Americas Inc. Increases could be more difficult to attain after those new pounds hit the market, sources said.
In PP and PS, 3 cent-per-pound upward moves aren't yet through to most buyers contacted by Plastics News, but most expected to see those upticks by the end of February.
PP prices slid an average of 1 cent per pound in the fourth quarter of 2002, while average PS selling prices eroded an average of 2 cents per pound in that period.
Those changes are reflected on this week's resin pricing chart.
In PP, the announced hikes have been slowed partly by British Petroleum plc's release of an increase schedule that differed from those of other major PP producers. In PS, producers' attempts to reduce or eliminate price protection - which had extended to 60 days in some cases - weren't completely successful, impeding price increase efforts.
Several PP buyers, including major PP compounder Ferro Corp. of Cleveland, said they expected to see the upward move. Industry contacts said strong early year PP demand - on top of 5 percent growth APC reported in the United States and Canada through November - could tighten supplies as early as the second quarter of 2003, if not sooner.
The only new capacity set to hit the market will be 800 pounds from a new ConocoPhillips Corp. plant in Linden, N.J. Market leader Basell NV, which is marketing the new material, won't have access to the new capacity until the second half of the year, insiders said.
The combination of a small fire and a maintenance turnaround limited production at Pinnacle Polymers' plant in Garyville, La., in February, industry contacts said.
A similar maintenance turnaround is expected to cut production at Chevron Phillips Sumika Polypropylene Co.'s plant in Pasadena, Texas, during March, sources indicated.
In PS, sources described ``a changing in culture'' taking place regarding the idea of price protection.
The practice, once regarded as a courtesy and now included in some contracts, has prevented PS makers from passing on increases in feedstocks like styrene monomer and benzene in a timely fashion, according to industry executives Jeff Denton at Dow Chemical Co. and Rick Salvador at Nova Chemicals Inc.
``A lot of times, we end up absorbing a portion of these [styrene and benzene] increases because price protection prevents us from passing them on,'' Denton said.
Salvador cited recent increases of 12 cents per pound on styrene and of 33 percent since December on benzene as factors putting price pressure on PS makers.
APC placed U.S./Canadian PS sales growth at 7 percent through November 2002. Much of that growth came from PS film and other nonfoam extruded uses.