While polyethylene makers are lifting the energy surcharge they tacked on in early March, polystyrene makers are holding on to a similar surcharge.
Makers of polypropylene, amorphous PET and expanded PS also have been successful in moving up prices for their products in recent weeks.
The 6 cent-per-pound PE surcharge has disappeared as natural gas prices have dropped below $5 per million Btu. Natural gas prices had been in the $7-$9 range - with spot prices approaching $20 - when the surcharge was announced.
``The surcharge served its purpose,'' said a PE executive. ``It made a big difference in our revenues. Now that natural gas costs are more in line, or at least not at spike levels, we can remove it.''
``The alternative was that we were going to lose so much money that we were seriously considering shutting down,'' a second PE executive added. ``We couldn't even get the molecules we needed to make [PE feedstock] ethylene. We were only making ethylene at 70-80 percent of our capacity, and we're usually around 90 this time of year.
``I think we earned a little credibility by passing the surcharge through,'' the official added. ``Everybody read the papers and everybody knew what was going on with natural gas prices.''
The fleeting nature of the energy surcharge made it tough for some PE buyers to pass it on. One buyer in the Southeast said he had set a late March date to raise prices of his own finished goods when he received word that the surcharge would be lifted April 1. As a result, the buyer decided not to raise his finished goods price.
Other PE buyers said they were able to negate some of the surcharge by using material they had stored up via buying ahead in January and February. Using the pre-bought material effectively reduced the amount of material they bought at the higher March price.
PE makers also continue to beat the drum heralding the removal of price protection, an industry practice that has slowed their ability to pass feedstock price increases on to their customers.
``The industry has to figure out a way to deal with [price protection],'' one PE executive said. ``It's not just about resin makers - it's about everybody being able to pass on their cost increases in a more timely manner.''
Even with the surcharge removed, prices for high, low and linear low density PE are up an average of 11 cents per pound this year. Some buyers that did not see a previously announced 6 cent-per-pound increase in early March were seeing it last week, sources said. PE makers now are working on a 5 cent-per-pound increase set to take effect in mid-April or early May.
PS makers were not so quick to dispense with the 4 cent surcharge they implemented a month ago, claiming they still needed the additional amount to offset high feedstock costs.
``The cost to produce our products hasn't gone down,'' said John Siegrist, PS business director for Nova Chemicals Corp., a major PS maker based in Pittsburgh. ``Natural gas has gone down, but that's only one-third of the cost of [styrene] monomer.
``At the same time, [PS feedstock] benzene has gone up,'' Siegrist added. ``There's been a tremendous [supply] disruption in that material.''
PS prices are up an average of 10 cents per pound on the year.
In PP, solid growth in spite of a waning economy allowed producers to nudge prices up an average of 3 cents per pound in March. Some buyers accepted 5 cents in March increases, but a majority of buyers contacted by Plastics News reported seeing 3.
``The market is still very, very tight,'' said Craig Blizzard, PP marketing manager for Basell North America, a major PP maker based in Wilmington, Del. ``We're shipping every pound we can make and we're drawing down inventory.''
Blizzard credited the successful price increases - an average of 9 cents per pound this year, according to the PN resin pricing chart - to the fiber market bouncing back more than expected. Injection molded consumer goods also ``are going like gangbusters'' in the early part of 2003, he said.
PP makers now are working on 5 cent-per-pound increases announced for April 1.
Prices for amorphous PET and EPS - materials with relatively small merchant markets - also have jumped in 2003.
Amorphous PET - a market that includes suppliers Wellman Inc. of Shrewsbury, N.J., and Voridian Inc. of Kingsport, Tenn. - has risen an average of 5 cents per pound. EPS, primarily made by Nova and Huntsman Corp. of Salt Lake City, has seen a surge of 10 cents per pound on average, according to industry contacts.
Producers cited similar increases and tightness in a variety of feedstocks - including ethylene, styrene, benzene, paraxylene, purified terephthalic acid and ethylene glycol - as reasons for the higher prices.